Compare
Flat-Fee Financial Advisor vs. AUM Advisor
Compare a flat annual advisory fee with a percentage-of-assets fee, including how each model affects cost as a portfolio grows and what services may be included.
Novak charges $4,000 or $6,000 annually for ongoing financial planning and investment management. Its fee is not calculated as a percentage of the client's portfolio, although the applicable plan or published fee may change over time.
An AUM (assets under management) advisor instead charges a percentage of the client's managed investment assets, commonly with rates that decline at higher asset levels through a tiered schedule. Because the fee is calculated as a percentage, the dollar cost rises as the managed portfolio grows.
Side-by-side comparison
| Feature | Flat-Fee Advisor | AUM Advisor |
|---|---|---|
| How the fee is calculated | A fixed dollar amount agreed upon in advance; Novak currently charges $4,000 or $6,000 annually | A percentage of the client's managed investment assets, calculated periodically (often quarterly) |
| How cost changes | Does not automatically rise or fall with the managed portfolio; the fee may change if the engagement, applicable plan, or published pricing changes | Rises or falls in dollar terms as the value of the managed portfolio changes; tiered schedules may reduce the percentage applied at higher asset levels |
| Asset minimums | May or may not apply; Novak requires no asset minimum | Often required; minimums vary widely by firm |
| Planning and investment management | Often bundled into one fee, as with Novak's annual advisory fee | Investment management is typically included; financial planning may be bundled or billed separately depending on the firm |
| Relationship between fee and assets | Advisor compensation is not calculated from the amount of assets managed | Advisor compensation is directly tied to the amount of assets managed and generally rises or falls with the portfolio's value |
| Billing method | May be invoiced directly or deducted from an investment account, depending on the firm and agreement | Commonly deducted from managed investment accounts, although billing practices vary |
Illustrative annual cost at a 1% AUM fee
| Managed assets | Illustrative annual fee |
|---|---|
| $250,000 | $2,500 |
| $500,000 | $5,000 |
| $1,000,000 | $10,000 |
| $2,000,000 | $20,000 |
Figures above illustrate a hypothetical 1% AUM fee. The 1% rate is illustrative only; actual AUM rates vary by firm, and many use tiered schedules that reduce the effective rate as assets grow. Underlying investment expenses may apply under either a flat-fee or AUM arrangement.
Which one fits you?
A flat-fee advisor may fit you if…
- ✓You want a predictable annual fee
- ✓You do not want your advisory fee calculated from portfolio size
- ✓You prefer a flat-fee firm without an asset minimum, such as Novak
- ✓Your assets are large relative to the flat fee
An AUM advisor may fit you if…
- ✓You prefer fees deducted directly from managed accounts
- ✓You prefer an advisory fee directly tied to the amount your advisor manages
- ✓Your portfolio is smaller relative to a flat planning fee
- ✓You prefer your advisory fee to adjust automatically as your managed portfolio rises or falls
Frequently asked questions
Is flat-fee advice cheaper than AUM?
It depends on portfolio size and the specific rates involved. A flat fee does not automatically change solely because assets grow, so it tends to become comparatively less expensive as a portfolio gets larger. An AUM fee that looks smaller in dollar terms on a smaller portfolio can become larger in dollar terms as assets increase. Compare the actual dollar cost at your specific asset level under each model, not just the fee type.
How is an AUM fee calculated?
An AUM fee is typically a percentage of the client's managed investment assets, calculated periodically, often quarterly, and either billed or deducted directly from the account. Many firms use tiered schedules, so the percentage rate may decline as assets grow, meaning the effective rate on a larger portfolio can be lower than the firm's stated starting rate.
What services are included?
Services vary by firm regardless of pricing model. Some flat-fee advisors, including Novak, bundle comprehensive planning and investment management into one fee. Some AUM advisors include comprehensive planning as part of the advisory fee, while others charge separately for planning or provide investment management only. Ask any advisor directly what's included before comparing cost.
Does either model eliminate conflicts of interest?
No. Every compensation model creates its own incentives. A flat fee removes the incentive to grow managed assets specifically, but it doesn't eliminate every possible conflict. An AUM fee ties compensation to asset growth, which can align an advisor's interests with a client's portfolio growth but can also create an incentive to keep assets under the firm's management. Ask any advisor directly how they're compensated and what conflicts, if any, they've identified.
Disclosure: Novak Financial Partners created this comparison and has a financial interest in prospective clients considering our practice. This page describes flat-fee and AUM pricing models generally, using Novak's own published fee as an example of the flat-fee model; it does not name or evaluate any specific AUM-based firm. Information reflects general industry practices as of September 2026 and may not apply to every advisor; confirm fees and services directly with any advisor you're considering.
Curious how Novak fits your situation?
Book a free 30-minute intro call to learn how we work and see whether Novak may be a good fit.
Schedule a Free Intro CallFlat annual fee. No asset minimum. Serving clients nationwide from Carbondale, IL.