Reviewed September 2026.
An AUM fee (assets under management) is an advisory charge equal to a percent of the portfolio each year. A 1.00% AUM fee on $250,000 costs about $2,500/year; the same percent on $50,000 costs about $500/year. Compare that dollar figure to flat-fee planners and to DIY index funds, then add fund expense ratios and brokerage account fees. Robo-specific fit: Robo-advisor fees.
Convert percent to dollars first
| Portfolio | 0.25% AUM | 0.50% AUM | 1.00% AUM |
|---|---|---|---|
| $50,000 | $125/yr | $250/yr | $500/yr |
| $250,000 | $625/yr | $1,250/yr | $2,500/yr |
| $1,000,000 | $2,500/yr | $5,000/yr | $10,000/yr |
Many human advisors charge around 0.75%–1.25% for full-service relationships; many robos cluster near 0.25%. Tiered schedules (example: 1.00% on the first $500k, then 0.70%) change the blended rate as you grow. Ask for the blended percent on your balance, not only the brochure headline.
AUM vs flat fee vs DIY (worked sketch)
Jordan has $200,000 in a taxable brokerage plus IRA, invested in low-cost index ETFs with a 0.05% average expense ratio ($100/year).
| Path | Advisory / planning fee | Fund ERs | Approx. all-in year 1 |
|---|---|---|---|
| DIY at Fidelity/Schwab/Vanguard | $0 | $100 | ~$100 |
| Robo at 0.25% AUM | $500 | $100 | ~$600 |
| Human AUM at 1.00% | $2,000 | $100 | ~$2,100 |
| Flat-fee planner | $2,400/year (example retainer) | $100 | ~$2,500 |
| Hourly planner | $300/hour × 6 hours = $1,800 (one-time plan year) | $100 | ~$1,900 that year |
On $200k, a 1.00% AUM fee ($2,000) is in the same neighborhood as a $2,400 flat retainer. On $80k, 1.00% is only $800, so a $2,400 flat fee is usually more expensive unless you need complex tax/estate work. On $800k, 1.00% is $8,000, and a flat or project fee often wins on pure cost if you can implement alone.
What the AUM fee is supposed to buy
- Ongoing portfolio management and rebalancing
- Financial plan updates, tax-aware withdrawals, or human advice access
- Behavioral coaching (hard to price; still a real reason some households pay)
It does not replace fund expense ratios, trading commissions (if any), account fees, or product loads. Count each charge once: check whether the quoted advisory or wrap fee already bundles brokerage/custody, then add only separately billed costs (Brokerage fees).
Comparison checklist
- Write AUM cost as $/year on today’s balance and on a balance 2× larger.
- Ask whether cash, held-away 401(k)s, or home equity count toward AUM (billing base games).
- Identify what the quoted advisory/wrap fee already includes, then add only separately charged fund ERs, custody, or other line items (a wrap fee is not automatically an add-on on top of the stated AUM charge).
- Compare to a written flat annual fee and to a one-time hourly plan + DIY implementation.
- DIY path: two to three index funds + automatic investing (Start with $50/month if you are small-balance).
- Confirm fiduciary status and Form ADV Part 2; fee-only vs fee-based is a different disclosure conversation.
- Exit plan: ACATS transfer, prorated refunds, tax lots moved in-kind.
When AUM can still be rational
- You would not invest or rebalance without the relationship.
- Complexity (RSUs, business sale, tax-loss harvesting across many lots) exceeds your DIY skill.
- The blended fee drops as assets grow and the advice stays useful.
When DIY usually wins: simple index allocation, steady contributions, and comfort opening a calendar twice a year (Investing basics).
Educational only. Not investment advice. Fee schedules, breakpoints, and fiduciary duties vary by firm; verify Form ADV and your client agreement before you hire anyone.