About Flat Fee Model

What is a flat fee advisor?

A flat-fee advisor is defined as a financial advisor who:

  • Charges a fixed fee that does not vary over the length of the contract;
  • Provides both financial planning and investment management services for that fee; and
  • May also be referred to as a “fixed-fee advisor.”

Example: I charge $4,200 annually for an individual client & $5,400 for a couple plus a one-time upfront fee of $500 for financial planning and investment management.

A flat-fee advisor is not somebody who:

  • Provides financial planning for a flat fee, and investment management services for an AUM fee;
  • Provides financial planning for a flat fee, and receives commissions for selling insurance or brokerage products;
  • Offers clients the option to be charged either a flat fee, a commission, or an AUM fee. No multiple fee options provided; there is only one option provided;
  • Makes more money when the value of the assets in the client’s portfolio goes up;
  • Works for a wirehouse or broker dealer firm and charges commissions;
  • Is dual-registered;
  • Is a hybrid advisor;
  • Charges an AUM fee in addition to a flat fee;
  • Charges commissions in addition to a flat fee;
  • Earns commissions for selling insurance in addition to a flat fee; or
  • Provides only financial planning services (this is called ‘advice-only’; not flat fee).

Some flat-fee advisors:

  • Adjust their contracts for inflation; or
  • Provide differing levels of service for different flat-fee amounts.

Example: I charge $2,250-$3,500 for a One-Time Financial Plan depending on complexity and needs of the client.

Why work with a flat fee advisor?

  1. Reduced conflict-of-interests: no incentive to encourage managing more of your assets instead of recommending the funds be utilized for other purposes such as paying down debt, etc.
  2. Transparency: you know the exact price you’ll be paying 
  3. Simplicity: no calculations necessary to understand fee