Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Comparison tables scroll horizontally on smaller screens.
Updated on January 26, 2026
Short answer: “1% AUM” is often a headline rate. Your effective rate can be lower (tiers by slice) or higher (“all-in” once platform fees + fund ERs are added). See the real math at $250k, $500k, and $1M, then compare against a flat or hourly plan.
Quick math (headline 1%): $250,000 → $2,500/yr • $500,000 → $5,000/yr • $1,000,000 → $10,000/yr. Many advisors bill tiered “by‑slice,” so your effective % can be lower—while “all‑in” costs can be higher once you add fund/ETF expense ratios and any platform fee.
Key terms
- AUM fee: percentage of assets for ongoing advice/management.
- By slice (tiered): like tax brackets — each tier rate applies only to that portion.
- All-in cost: advisory fee + fund/ETF expense ratios + any platform/overlay fee.
Compare the 1% quote with alternatives
Editorial standards: see our Editorial Policy.
Before you decide, see what you’d actually be paying for.
A 1% fee often includes ongoing portfolio monitoring. If you’re weighing whether to pay for that, a self-serve research tool shows you what monitoring your own portfolio actually looks like.
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Scenario A: Common tier schedule (“by slice”)
Example tiers many firms use:
- 1.00% on first $250k
- 0.75% on next $250k
- 0.50% above $500k
Advisory fee & effective % (Scenario A)
| Portfolio | Advisory $ | Effective % |
|---|---|---|
| $250,000 | $2,500 | 1.00% |
| $500,000 | $4,375 | ~0.88% |
| $1,000,000 | $6,875 | ~0.69% |
Worked $750k example: 1%×$250k ($2,500) + 0.75%×$250k ($1,875) + 0.50%×$250k ($1,250) = $5,625 → 0.75% effective.
Scenario B: Flat 1.00% on the whole balance
| Portfolio | Advisory $ | Effective % |
|---|---|---|
| $250,000 | $2,500 | 1.00% |
| $500,000 | $5,000 | 1.00% |
| $1,000,000 | $10,000 | 1.00% |
“All-in” = advisory + fund ERs + platform fee
Add typical fund/ETF expense ratios and any platform/overlay fee from Form ADV.
| Portfolio | Advisory | ETF ER (0.06%) | Platform (0.10%) | All-in / yr | All-in % |
|---|---|---|---|---|---|
| $500,000 (Scenario A) | $4,375 | $300 | $0 | $4,675 | 0.94% |
| $500,000 (Scenario A) | $4,375 | $300 | $500 | $5,175 | 1.04% |
| $1,000,000 (Scenario A) | $6,875 | $600 | $0 | $7,475 | 0.75% |
| $1,000,000 (Scenario A) | $6,875 | $600 | $1,000 | $8,475 | 0.85% |
| $500,000 (Flat 1%) | $5,000 | $300 | $0 | $5,300 | 1.06% |
Break-even vs a flat annual fee
At what portfolio size does a flat annual quote beat Scenario A?
| Flat annual fee | Break-even portfolio (Scenario A) | Break-even if flat 1% on all |
|---|---|---|
| $3,000 | ~$316,667 | $300,000 |
| $4,000 | ~$450,000 | $400,000 |
| $5,000 | ~$625,000 | $500,000 |
Illustrative math; always compare all-in dollars and scope/SLAs.
When 1% may be fine — and when to consider alternatives
- Reasonable at smaller balances if you’re getting full planning, low-cost funds, and no platform fee.
- Consider flat-fee as balances rise (or ask for a cap/tier cut) — the dollar fee can outgrow the workload.
- Consider hourly for targeted work (2–7 hours) when you don’t need ongoing monitoring.
Copy/paste email to negotiate
Subject: Fee options — cap or flat-fee alternative Hi — I’m comparing “all-in” costs at my balance of $[amount]. Could you provide: 1) Your tiered AUM schedule (by slice), and confirm any platform fee (bps), 2) A flat-fee annual alternative (scope + SLAs) or a fee cap at $[cap], 3) Typical ETF ERs you use. Thank you!
FAQ
Is “1% AUM” standard?
It’s common as a starting tier, but many firms reduce the rate at breakpoints (by slice). Always ask for the tier table and examples.
Are AUM fees charged on the whole balance?
Usually by slice (like tax brackets). Some firms do flat 1% — confirm in writing.
How do I compute my “all-in” cost?
Add advisory fee + any platform/overlay fee + fund/ETF expense ratios (from Form ADV and proposal).
Are advisory fees tax-deductible?
For most individuals, investment advisory fees aren’t currently deductible for U.S. federal taxes; confirm with a tax professional for your situation.
Related reads & tools
- AUM Fees Explained · AUM Fee Examples
- Flat-Fee Financial Planning · Hourly Financial Advisor: Rates
- Fixed vs Flat vs Retainer · Negotiate Fees (scripts)
What to do next
Editorial standards: see our Editorial Policy.
Education only; not tax or investment advice. Confirm fees, platform costs, fund ERs, and scope/SLAs in writing (see Form ADV Items 5, 12, 14).
What the filings actually say. We measured the fee schedules 176 SEC-registered advisers publish in their Form ADV Part 2A filings: at $250,000 only 28.4% disclose a fee you can price at all, and the weighted median annual cost among those that do is $2,000 to $2,500. The full benchmark, with method.
At $1 million and above: are private banks worth it? — the surcharge priced against our measured median rather than against a brochure, with what the premium actually buys and what it does not.