Flat Fee vs AUM Cost Comparison Tool

Flat Fee vs AUM Calculator

Flat Fee vs AUM Cost Comparison

This tool is designed to illustrate how flat fee and assets-under-management (AUM) pricing can behave over time under different assumptions. It does not evaluate advisor quality or recommend one pricing model over another. Results will vary based on portfolio size, services included, fee structure, and individual circumstances.

How To Interpret The Results

This comparison is sensitive to assumptions. Small changes to return rates, fees, time horizon, distributions, or inflation can materially affect outcomes. The tool is best used to explore how different pricing models behave over time rather than to estimate precise future costs.

When reviewing the results, focus on patterns rather than exact dollar amounts. Consider how fees scale as portfolios grow or decline, how predictable costs are over time, and how those dynamics align with your preferences and expectations.

Inputs

Starting Portfolio Value Total invested assets used for the comparison.

Average Annual Return % Assumed constant annual return (before advisory fees).

Inflation Rate % Used only to inflation-adjust totals and ending values.

Annual Distribution (Year 1) Amount withdrawn at the end of year 1.

Distribution Increase % Assumed annual increase in distributions.

Percantage-based (AUM) fee

AUM Fee % Applied annually to the portfolio value (simplified)

Annual Increase To AUM Fee% Optional.if 0 fee % stays flat

Flat Fee

Annual Increase To AUM Fee%) Paid annually (simplified)

Annual Increase To Flat Fee%) Optional.if 0 fee stays flat

Time Horizon (Years) Model Length

Fee Timing simplification. Real billing schedules vary.

Results

Total Fees Paid (Nominal)

Ending Portfolio Value (Nominal)

Total Fees Paid (Real)

Adjusted using the inflation rate input.

Ending Portfolio Value (Real)

Adjusted using the inflation rate input.

In this scenario, the flat-fee ending value becomes higher than the AUM-fee ending value starting in year 1. (This depends heavily on assumptions.)

Disclosure: This calculator is for educational illustration only. It simplifies real-world fee billing, taxes, investment expenses, cash flows, and market variability. It does not provide investment, tax, or legal advice. Consider consulting a qualified professional for guidance specific to your situation.