Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
Updated on February 1, 2026
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Plain-English definitions for advisor fees, scope, and billing—so you can compare AUM, flat, and hourly in annual dollars with the same scope + SLAs.
Quick answer (2026)
If you want apples-to-apples fee comparisons, hold the scope constant (deliverables + cadence + response-time SLAs), then convert every model into all‑in annual dollars.
- AUM % → tiered “by‑slice” × assets, plus fund/ETF expense ratios + any platform/overlay fee.
- Flat/retainer → annual or monthly dollars for a written scope + SLAs (what’s included/excluded).
- Hourly/project → rate × hours, with a written deliverable and a not‑to‑exceed (NTE) cap.
Tip: Use your browser’s “Find on page” (⌘F / Ctrl-F) to jump to any term.
A
- ADV (Form ADV)
- Disclosure filed with the SEC/state that lists fees, services, conflicts, and disciplinary history. Ask for Items 5, 12, and 14.
- All-in cost
- Total dollars you pay each year: advisory fee + fund expense ratios + platform/admin fees.
- AUM (Assets Under Management)
- Fee model based on your portfolio size, usually tiered by slice (marginal). Convert to dollars with the AUM Tier Calculator.
- Arrears vs. in advance
- Whether fees are billed after service (arrears) or before (in advance). Check refund terms on termination.
B
- Breakpoint (by-slice)
- Balance thresholds where the AUM % drops on the next slice. Improves effective % as assets grow.
- Billing on cash
- Whether idle cash is billed at full %, reduced %, or waived. Clarify in writing.
C
- Cap (dollar NTE)
- A not-to-exceed dollar limit per year on fees. Example clauses: see negotiation scripts.
- Conversion option
- Right to switch pricing (e.g., AUM → flat fee) if AUM dollars exceed $X.
- Custodian
- Firm that safekeeps your assets and issues statements (e.g., Fidelity, Schwab). Separate from the advisor.
D
- Deliverables
- Specific outputs you receive (written plan, portfolio map, RSU/benefits checklist). Define them in the scope.
- Discretionary vs. non-discretionary
- Whether the advisor trades without prior approval (discretion) or only with your sign-off (non-discretion).
E
- Effective AUM %
- Total AUM dollars ÷ your assets. Often lower than the headline tier % due to by-slice math.
- Expense ratio (ER)
- Fund-level annual operating cost. Count these in your all-in dollars.
F
- Fee-only
- Advisor is only paid by you (no commissions or revenue-sharing). Often paired with “fiduciary at all times.”
- Fiduciary
- Owes you a duty of loyalty and care at all times. Get it in writing.
- Fixed fee vs flat fee
- Commonly used interchangeably: one price for a defined scope. Confirm what’s included/excluded.
- Flat fee
- Fixed annual or project price for a written scope + SLAs. See flat-fee guide.
H
- Hourly rate
- Pay per hour for defined tasks. Typical range: see hourly rates (2026).
- Hourly NTE (not-to-exceed)
- Cap on hours/cost without your prior written approval (e.g., 3.0 hours NTE).
I
- IAR / RIA
- Investment Adviser Representative / Registered Investment Adviser. The person vs the firm.
- Inclusions/Exclusions
- What is covered vs billed separately (e.g., tax prep, legal docs, discretionary trading).
N
- Negotiation levers
- Dollar caps, improved breakpoints, onboarding + lower renewal, scope trims, exclusion of idle cash/employer stock.
P
- Platform/admin fee
- Custodian/technology charges beyond advisory fees. Add to all-in dollars.
- Pro-rata billing
- Proration when you start/terminate mid-period. Check refund language.
R
- Retainer (annual flat)
- One annual price for a year of planning/services under a written scope + SLAs.
- Revenue sharing / soft dollars
- Compensation the advisor/BD receives from product/platform providers. Ask for disclosure.
- RSU / ISO / ESPP / AMT
- Equity-comp acronyms. See decision guide: RSU taxes—sell-to-cover vs net shares.
S
- Scope
- What you’re paying for—deliverables, constraints, timelines.
- SLAs (service-level agreements)
- Response times and meeting cadence (e.g., 2 reviews/year; 2-business-day email replies).
- Suitability vs fiduciary
- Suitability = “okay for you.” Fiduciary = “best interest.” Prefer fiduciary at all times.
T
- Termination fee
- Any charge if you leave mid-period. Confirm pro-rata refunds.
- Tiered schedule (by-slice)
- Marginal-tier AUM math. Each balance slice billed at its own %; add dollars across slices.
W
- Wrap fee
- Bundled advisory + trading/transaction fees. Still add fund ERs to get all-in dollars.
What to do next
- Compare flat vs hourly vs AUM in one table.
- Convert AUM tiers to annual dollars (by-slice).
- Use negotiation scripts to request caps/breakpoints.
Education only; not legal, tax, or investment advice.
UMA, overlay, wrap fee: see these terms priced in practice in the UMA platform cost guide, with dollar examples at $1,000,000.
Market context: see US financial advisor statistics — firm counts, AUM, and state rankings computed from the SEC roster.
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.