Choosing a flat-fee advisor over a 1% AUM advisor can lead to significant savings, especially over long periods of time. Here’s why:
Lower Costs Over Time – A 1% AUM fee grows as your assets grow, meaning you could end up paying tens or even hundreds of thousands more over 30 years. In contrast, a flat fee remains stable.
Keeps More of Your Investment Growth – With an 8% annual return, your portfolio compounds significantly over time. Paying a percentage-based fee means you're losing a growing portion of those gains every year.
Cost Predictability – A flat fee provides a stable, transparent cost, while AUM fees fluctuate based on your portfolio value, making it harder to plan for expenses.
Alignment of Interests – A flat-fee advisor focuses on comprehensive financial planning rather than growing assets just to increase their own fees. This can lead to more holistic advice.