What is a flat-fee financial advisor?
A flat fee is the second most common method financial advisor to earn moneyAccording to the Envestnet study. Flat-fee financial advisors charge a fixed dollar amount for their services rather than an asset-based fee that can change as the value of your investments increase or decrease.
Envestnet found that the average AUM fee is 0.96%, although some companies split their fees so that as your balance grows, your fee percentage decreases. The average flat fee is $2,926, up from $2,554 in Envestnet’s 2023 study.
A flat-fee model provides predictability and may be more affordable for people with high balances. It can also help limit conflicts of interest. For example, a financial advisor who earns AUM fees has an incentive to recommend you keep assets in the accounts they manage for you, because it makes them more money. On the other hand, a flat-fee advisor charges the same fee whether you keep your assets in an investment account managed by them or you use some of that money to buy a new home or start a business.
How flat-fee pricing models work
There are a few different flat-fee pricing models that companies or individual advisors can use. Some charge a single flat fee, project-based fees for a one-time financial plan, an annual retainer, or a monthly subscription fee for ongoing services. Hourly fees are also somewhat common.
The services you are looking for will determine which pricing model is right for you. It may be worth paying an annual or retainer fee if you want to work with your advisor on an ongoing basis. If you want an advisor to create a financial plan for you or advise on your current investment strategy, project-based or hourly fees may be better.
How to decide whether a flat-fee model suits your financial needs
One of the main drawbacks of advisory firms offering investment management for a flat fee is that clients with low balances pay a larger portion of their assets than clients with high balances.
For example, if a firm charges a flat fee of $5,000 and you have a balance of $100,000, you are paying 5% of your assets for investment management, while a client with a $1 million balance pays 0.5%.
If you have a large portfolio, Choosing a Financial Advisor The flat-fee model may be a more cost-effective option. You’ll also need to look for a flat-fee advisor if you don’t want investment management. You can search for flat-fee or consultation-only advisors online to find reputable firms in your area.
What services are typically included with flat-fee advisors?
Flat-fee advisors provide many of the same services as other financial advisors. wealth manager. These may include financial planning, budgeting, retirement planning and tax guidance. Flat-fee advisors cannot manage your portfolio or offer products or services from which they will earn commissions. Each advisor offers different services and in different structures. Some may bundle their services, offer tiered models, charge a fixed amount for services used at a specific time, or provide a la carte or add-on services.
Methodology
Buy Side analyzed some of the largest and most well-known independent RIA firms and scored those firms based on their fees, credentials, customer support, available services, portfolio construction, and account minimums. These factors were weighted based on WSJ reader surveys regarding which they considered most important. We chose high-scoring firms that offer some form of flat-fee services, including both flat-fee investment management and stand-alone financial planning.
We rated firms on a scale of 1 to 5 stars using a weighted scoring model out of 100 possible points. To ensure fair comparison, we used a relative grading scale and used the top performing firm as the benchmark. All other scores were indexed against this leader. Rather than needing to achieve a theoretical perfect score of 100, the 5-star rating represents top performance relative to the field.
FAQ
Are flat-fee financial advisors always fiduciaries?
Flat-fee financial advisors may be fiduciaries, but they are not always. Fiduciary Financial Advisor They have a responsibility to act in the best interests of their customers. Registered investment advisors (RIAs) have a fiduciary duty to their clients under federal law, but other financial professionals may not have the same obligation. You can ask if a financial advisor is a fiduciary or whether they will sign a fiduciary oath.
How much do flat-fee advisors typically charge?
According to Envestnet’s 2026 Financial Planning Fee Study, the average flat fee is $2,926. However, this can vary significantly from one advisor to another, and depends on the exact fee model type they use. For example, the average annual retainer fee is $6,815, while the average hourly fee is $307.
Do flat-fee advisors offer investment management or just planning?
Some financial advisors offer investment management for a fixed fee, but among larger firms, this is not as common as the AUM fee. In some cases, companies that charge AUM for investment management also offer flat-fee options for stand-alone financial planning.
What is the difference between flat-fee and AUM pricing?
AUM pricing means you will pay a percentage of your assets to your advisor each year. If an advisor charges 1% of AUM to manage $500,000 for you, you will pay $5,000 each year for that service. If your balance grows to $800,000, you’ll pay $8,000 per year.
A flat fee is a fixed dollar amount you can pay on a regular basis for ongoing services (such as annually) or as a one-time fee for a single project (such as creating financial planning or making investment recommendations). If a flat-fee advisor charges $5,000 a year for investment management, you’ll pay that much no matter how much money you have in your account.
Can I easily switch from a percentage-based advisor to a flat-fee advisor?
process for Changing Financial Advisors This may vary slightly depending on your agreement with your current firm, but it is generally relatively easy to switch. Your contract should detail how termination is handled, and your new advisor can help transfer your assets if necessary.