Financial advisor cost
Financial Advisor Cost: Flat Fee vs 1% AUM Examples
Advisor fees can be charged as a percentage of assets, a flat annual fee, an hourly fee, a project fee, or commissions. The right comparison is annual dollar cost plus what planning work is included.
Reviewed July 10, 2026 by Joel Miller, CFP, founder of Flames Financial Planning.
Short answer
How Much Should You Pay for a Financial Advisor?
Most financial advisors charge through one of five models: AUM fees, flat fees, hourly fees, project fees, or commissions. The best model depends on whether you want only investment management or broader planning across taxes, retirement, cash flow, and estate decisions.
A traditional 1% AUM advisor costs about $10,000 per year on $1 million and about $20,000 per year on $2 million. 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
What Different Advisor Fees Can Look Like
| Fee model | How it works | Example | Watch for |
|---|---|---|---|
| 1% AUM | Advisor charges a percentage of assets managed. | $10,000/year on $1 million. | Fee rises as portfolio value grows. |
| Flat fee | Advisor charges a stated dollar amount for planning. | Flames FP: $150, $900, or $1,650 quarterly ($600, $3,600, or $6,600 annualized). | Confirm exactly what is included. |
| Hourly | Advisor charges by the hour. | Useful for limited questions. | May not include ongoing implementation. |
| Project fee | Advisor charges for a defined plan or project. | Useful for one-time planning. | May not include ongoing advice. |
| Commission | Advisor is paid when a product is sold. | Insurance or investment product sale. | Ask about conflicts and alternatives. |
$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.
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Use the Free Dashboard Before You Compare Advisor Costs
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Advisor Cost Questions
How much does a financial advisor cost?
Financial advisor cost depends on the fee model. A 1% AUM advisor costs about $10,000 per year on $1 million, while flat-fee advisors may charge a fixed annual fee, hourly fee, or project fee. Flames Financial Planning's standard quarterly memberships are $600, $3,600, and $6,600 annualized depending on planning complexity.
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 fixed 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.
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.
Which costs less, a flat-fee financial advisor or an AUM advisor?
It depends on portfolio size and planning scope. AUM can be cheaper for smaller portfolios or narrow investment-only help. A flat fee can cost less for larger portfolios or households that want broader planning without tying the fee to assets.
What financial advisor fee model is best for a $2 million portfolio?
For a $2 million portfolio, a 1% AUM fee is about $20,000 per year. A flat-fee model can make sense if the household wants comprehensive planning and would rather pay for planning complexity than a percentage of assets.
Is paying a financial advisor actually worth it?
It can be, especially when the relationship helps you make better decisions across taxes, investments, retirement, and cash flow. The key question is whether the fee is reasonable for the work included and whether the pricing model fits the kind of help you want.
Is a flat fee always cheaper?
No. A flat fee is not always cheaper, especially for smaller portfolios or limited needs. The important question is whether the cost is fair for the services included.
Use your numbers
Compare Advisor Fees With an Interactive Calculator
Turn AUM percentages, flat annual fees, hourly rates, and project quotes into comparable dollar estimates before you evaluate the services included.
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Financial Planning, Explained Clearly
Use the video for the walkthrough, then use the written guide for the details, examples, and next steps.
Flat Fee vs 1% Financial Advisor
See how a percentage fee changes in dollars as a portfolio grows and what to compare beyond the headline rate.
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