Work out what an advisory fee costs in dollars each year, what your effective rate is on a tiered schedule, how it compares with the median, and what it adds up to over time.
| Portfolio size | Median AUM fee |
|---|---|
| Under $250,000 | Almost 1.25% |
| Up to $1 million | 1.00% |
| Over $1 million | About 0.85% |
| $5 million and up | About 0.50% |
Sources: Bob Veres' Inside Information research as reported by Kitces.com, and Kitces Research for the 1.0% median up to $1 million.
Each rate applies only to the slice of the portfolio inside its tier.
Example: $1,500,000 portfolio
First $1,000,000 × 1.00% = $10,000
Next $500,000 × 0.75% = $3,750
Annual fee = $13,750
Effective rate = $13,750 ÷ $1,500,000 = 0.92%The long-term figures assume the return you enter, with the fee taken out once a year on the year-end balance. Real returns vary year to year.
This calculator is for estimates only and is not financial advice.
Most advisors charge a percentage of the assets they manage. Kitces Research found the median fee is 1.0% for portfolios up to $1 million. Fees usually step down on larger balances, and research by Bob Veres cited by Kitces puts the median at about 0.50% for portfolios of $5 million or more.
A tiered or graduated fee charges a different rate on each slice of your portfolio. For example, 1.00% on the first $1 million and 0.75% on the next $1 million. A $1.5 million portfolio would pay $10,000 plus $3,750, or $13,750 a year, an effective rate of about 0.92%.
It depends on what the fee covers. Many advisors bundle financial planning, tax planning, retirement income and estate coordination into the same fee. Compare the dollar amount with the services you use, and ask whether planning is included or billed separately.
The advisory fee is only part of the cost. Fund expenses, trading costs and platform fees come on top. In the Veres research cited by Kitces, the all-in cost for portfolios up to $1 million averaged about 1.65%. Use the fund expenses field to include them.
Fees come out every year, so the money paid also stops growing. Over 20 or 30 years, the gap between a portfolio with fees and one without can be several times the fees paid. The calculator shows both numbers.
Clients compare fees before they call. Advisors who explain their pricing and value clearly on their website win more of those comparisons. We help advisory firms rank for the searches their ideal clients make. Ask for a free audit.
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