Which Makes Sense For Me?

aum vs flat fee

Working with a professional financial advisor can make or break your long-term financial goals, but how are they paid and how do you pick one? Most financial advisors are paid through a flat fee or by being paid a percentage of the amount you have invested with them, which is called assets under management (AUM). Flat fee and AUM-based financial advisors each have benefits and downsides and each fee structure is ideal for a different type of investor and situation. 

How Flat-Fee Financial Advisors Work

Flat-fee financial advisors work on a set rate, usually based on their experience, how often you’ll see them and the scope of their services. While it is possible to find financial advisors who charge an hourly rate with a retainer similar to a lawyer’s office, that setup is less common. Most often, a financial advisor charging a flat fee will charge an upfront lump sum for an evaluation and strategy session followed by quarterly, biannual or annual check-ins. 

Prices will vary based on your local market and the experience of the advisor but this could look something like an upfront fee of $10,000 for a comprehensive financial plan and an annual cost of $3,000 thereafter for biannual check-ins. 

Monthly subscription services have risen in popularity and are starting to be implemented by more financial advisors. These may include an upfront fee for an initial consultation followed by a monthly subscription or may bake the cost of the initial consult into…

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