Why I don't charge my clients a percentage of their money

Most financial advisors get paid a cut of what you have. I don't. When I built this business, I knew I wanted it to work differently than the standard model. Here's why.

The standard model
Walk into most financial advisory firms and you'll be offered this: Pay a percentage of your assets, every year, for as long as you're a client. It's the industry default.

According to an industry survey of over 600 U.S. advisors, 86% of advisory firms rely on AUM fees as their primary source of revenue. The average fee sits around 0.96% — call it 1% for easy math.

Here's what that 1% means in practice. If you have $500,000 invested, you're paying roughly $5,000 a year. Get to $1 million, and you're paying around $10,000 a year. To be fair, many firms don't charge a flat 1% all the way up. Tiered pricing is common, where the percentage drops as your balance crosses certain thresholds. That helps a bit, but it doesn't fix the underlying issue: Your dollar cost still climbs as your balance climbs, even though your plan didn't get twice as complicated and your advisor isn't spending twice the hours. The relationship between what you pay and what you're actually receiving stays loose and opaque.

That's the mismatch. You're paying more over time, on autopilot, for work that doesn't scale the same way your account does.

What a flat fee buys you instead
A flat-fee model breaks that link. You pay for the planning — the actual work — not for the privilege of having your advisor manage a bigger number. The fee is based on the complexity of your situation and the scope of what you need, not on your account balance.

Here's why you should care about this:
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Your advisor's incentives point at your goals, not your assets. Under AUM pricing, an advisor's income grows when your account balance grows — which sounds aligned, until you notice how this could hypothetically discourage certain choices. Paying off a mortgage early, funding a business, gifting money to your kids while you're alive to see it used, converting to a Roth in a way that temporarily shrinks the taxable account — all of these can be genuinely right for you and genuinely reduce the assets your advisor gets paid on. A flat fee removes that tension altogether. My advice doesn't cost you more or less depending on what you decide to do with your money.

You know exactly what you're paying, and it doesn't creep. A percentage fee is invisible. It's deducted discreetly from your account, it scales with the market, and most people genuinely don't know their dollar cost until they sit down and calculate it. A flat fee is a number you agreed to. No surprises, no recalculating every quarter as markets move.

You're not paying for something you may not need. Most AUM arrangements bundle ongoing portfolio management together with planning, whether or not you actually need active, hands-on trading. But most households with a reasonably built, diversified portfolio don't need constant hands-on management. Instead, they need a solid plan, a periodic check-in, and someone to talk them out of bad decisions during volatile markets. That type of holistic planning doesn't require a fee that's tied to your balance.

Who the standard fee structure makes sense for
Listen, the AUM model isn't a scam, and it's not always the wrong choice. If you have a genuinely complex portfolio that needs frequent, hands-on trading and rebalancing, or you want someone with full discretionary control over day-to-day investment decisions, a percentage-based fee can reasonably reflect that ongoing work. It's a legitimate model for a specific kind of client and a specific kind of need.

But, I would argue, that's not most of us. Most people with $300,000, $800,000, or even $2 million in savings don't need a portfolio manager trading on their behalf. They need a plan they understand, help making the big decisions, and a check on their blind spots. Paying an ongoing percentage of assets for that isn't buying more value; it's just buying the same plan at a rising price.

The real question to ask your  potential advisor
Before you sign on with any advisor, ask this: As my assets grow, does my fee grow with them — and if so, what exactly am I getting for that increase? If the honest answer is "not much," you're not paying for advice. You're paying an unnecessary toll.

That's the entire case for flat-fee planning. Percentage fees aren't evil. They just charge you for the wrong thing. You should pay for expertise, for time, for a plan built around your actual life — not for the size of a number that has nothing to do with how hard the work is.