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Financial advisor cost

Financial Advisor Cost: Flat Fee vs 1% AUM Examples

Financial advisors may charge a percentage of assets under management, a flat fee, an hourly fee, a project fee, commissions, or a combination. Compare the annual dollar cost, services included, other expenses, and conflicts or limits of each arrangement before deciding which approach may fit your circumstances.

Reviewed July 10, 2026 by Joel Miller, CFP, founder of Flames Financial Planning.

Short answer

How Much Does a Financial Advisor Cost?

Financial advisors may charge an assets-under-management fee, a flat fee, an hourly fee, a project fee, commissions, or a combination. To compare fees for financial advisors, look at the annual dollar cost, what work is included, other expenses, and the limits or conflicts to verify.

A traditional 1% AUM advisor costs about $10,000 per year on $1 million and about $20,000 per year on $2 million, before underlying fund expenses or other account costs. Flames Financial Planning uses fixed quarterly memberships instead: $150, $900, or $1,650 per quarter ($600, $3,600, or $6,600 annualized), depending on service scope. The fee is not based on a percentage of your portfolio, so a larger portfolio does not automatically create a larger advisory bill if the planning work is the same.

Compare models

Compare Fees for Financial Advisors

Each model can fit a different kind of relationship. Use this comparison to identify the questions to ask, not as a recommendation for any particular household.

Pricing method	Common use case	What to verify	Limits to consider
AUM fee	Ongoing investment management	The annual dollar cost, tiered rates, services, and other account expenses	The fee may rise as portfolio value grows and may not include broader planning.
Flat fee	Ongoing or comprehensive planning	The stated fee, service scope, meeting cadence, and implementation support	Scope and pricing can differ by planning complexity.
Hourly fee	A limited question or second opinion	The hourly rate, expected hours, deliverables, and follow-up costs	It may not include implementation or ongoing advice.
Project fee	A defined plan or one-time project	The deliverable, timeline, revisions, and what happens after the project	It may not include ongoing monitoring or advice.
Commissions	A transaction or product-based relationship	How compensation is paid, conflicts, alternatives, and ongoing costs	Compensation can vary with the transaction or product selected.

$1M and $2M portfolios

What Fee Model Is Best for a $1 Million or $2 Million Portfolio?

For a $1 million portfolio, a 1% AUM fee is about $10,000 per year. For a $2 million portfolio, it is about $20,000 per year. A flat-fee model can make sense when you want comprehensive planning without automatically paying more because your portfolio crossed a certain size.

At Flames FP, the three quarterly memberships annualize to $600, $3,600, or $6,600 depending on service scope. That means a household with a $1 million or $2 million portfolio can compare the membership cost directly against a percentage-based AUM fee, then ask what planning work is included.

Cost

Compare the annual dollar cost, not only the percentage.

Scope

Ask whether investments, tax planning, tax-return preparation and filing through an independent tax partner, retirement, and estate guidance are included.

Incentives

Ask whether the advisor earns more when more assets stay under management.

Which costs less?

Which Costs Less: a Flat-Fee Advisor or an AUM Advisor?

AUM can be cheaper for a very small portfolio or a narrow investment-only relationship. A flat annual fee can become more attractive as portfolio size grows or when the household wants broader planning.

The crossover depends on portfolio size and planning scope. At $500,000, a 1% AUM fee is about $5,000 per year. At $1 million, it is about $10,000. At $2 million, it is about $20,000. A flat-fee advisor can cost less when the flat fee stays tied to planning complexity instead of portfolio value.

Citable fee math

What Is the Simple Math for a 1% AUM Fee?

Use this as the quick comparison: portfolio value multiplied by 1% equals the annual advisory fee before underlying fund, platform, or product costs. Then compare that dollar amount with the flat fee and the planning work included.

A 1% AUM fee equals $5,000 per year on $500,000, $10,000 per year on $1 million, and $20,000 per year on $2 million. Flames Financial Planning's memberships annualize to $600, $3,600, or $6,600, so the comparison is not just percentage versus percentage. It is annual dollar cost plus scope: investment management, tax planning, tax-return preparation and filing through an independent tax partner, retirement planning, estate guidance, and ongoing advice.

Primary-source example

How Can Ongoing Fees Change a Portfolio Over Time?

Investor.gov gives a hypothetical example of $100,000 growing 4% annually for 20 years. It is an educational fee illustration—not a return forecast—and shows why apparently small recurring percentages deserve attention.

Annual ongoing fee	Hypothetical value after 20 years	Difference from 0.25% example
0.25%	About $208,000	Baseline in the example
0.50%	About $198,000	About $10,000 less
1.00%	About $179,000	About $29,000 less

Source: Investor.gov, Updated Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio. Actual returns, fees, taxes, cash flows, and results will differ.

Free starting point

Use the Free Dashboard Before You Compare Advisor Costs

The Flames Financial Dashboard lets you organize net worth, cash flow, goals, debt, insurance, and estate documents before deciding whether a paid advisor relationship is worth it.

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Net worth, liabilities, income, savings, and goals make the advisor-cost conversation more concrete.

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Separate tool from advice

The dashboard helps you see the plan. The advisor relationship helps you make decisions and implement them.

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Bring better questions

Use the free dashboard first, then schedule a discovery meeting if the decisions need a second set of eyes.

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FAQ

Advisor Cost Questions

How much does a financial advisor cost?

Financial advisor cost depends on the fee model. Advisors may charge an AUM fee, flat fee, hourly fee, project fee, commissions, or a combination. A 1% AUM fee is about $10,000 per year on $1 million, before underlying fund expenses or other account costs. Compare annual dollar cost, services, limits, and conflicts.

How are financial advisor fees typically structured?

Financial advisors typically charge through AUM fees, flat annual fees, hourly fees, project fees, commissions, or a combination. AUM fees are based on assets managed. Flat fees are stated dollar amounts. Hourly and project fees are usually tied to limited-scope advice.

What does a flat-fee financial advisor typically cost?

Flat-fee advisors vary. Flames Financial Planning's standard quarterly memberships are $600, $3,600, and $6,600 annualized depending on planning complexity. Confirm the services, implementation support, and limits included at each level.

How much does a flat-fee financial advisor cost in Minnesota?

Minnesota flat-fee advisor costs vary by service model and complexity. Flames Financial Planning's standard pricing is $600, $3,600, and $6,600 annualized per year depending on the membership level, without charging AUM fees.

What does a 1% AUM advisor cost?

A 1% AUM advisor costs about $5,000 per year on $500,000, $10,000 per year on $1 million, and $20,000 per year on $2 million, before underlying fund expenses or other account costs.

Which costs less, a flat-fee financial advisor or an AUM advisor?

It depends on portfolio size, planning scope, services, and other expenses. AUM can cost less for smaller portfolios or narrow investment-only help. A flat fee may cost less for larger portfolios or broader planning when the fee is not tied to assets.

What financial advisor fee model is best for a $2 million portfolio?

There is no single best fee model for a $2 million portfolio. A 1% AUM fee is about $20,000 per year before underlying fund expenses or other account costs. Compare the annual dollar cost, services, conflicts, and limits with your needs.

Is paying a financial advisor actually worth it?

Whether an advisor relationship is worth the cost depends on the decisions involved, the work included, the fee arrangement, and your circumstances. Review the scope and total cost before deciding whether to engage an advisor.

Is a flat fee always cheaper?

No. A flat fee is not always cheaper. Compare the total annual dollar cost, services included, other expenses, and limits of each arrangement.

Use your numbers

Use the Financial Advisor Cost Calculator Before You Book

First, enter your portfolio value and the AUM percentage or dollar quote you are comparing. Next, add a flat annual fee, hourly estimate, or project quote. Then compare the dollar estimates with the services, other expenses, and limits you confirmed. Bring those questions to a discovery meeting if you want to discuss Flames FP's membership options.

Open the Financial Advisor Cost Calculator Compare Flat Fee vs AUM