When looking at AUM fees by asset levels, the report found that advisors are charging a smaller percentage fee for larger client portfolios. Median fees were 1.0% up to $1 million. The median fee then dropped to roughly 0.9% at $2 million and 0.8% at $5 million. At the 90th percentile, advisors reported charging roughly 1.5% for portfolios of up to $250k, 1.3% at $1 million, 1.1% at $2 million, and 1.0% up through $5 million.
Annual retainer fees ranged from $600 to $40,000, according to the survey. The median retainer fee was $4,000 per year, up from $3,200 in 2018.
“In comparison to our 2018 study, we do not see much evidence of fee compression, except for some possible compression at the very low-end for $100k portfolios,” Tharp said. “Interestingly, we actually see slightly higher fees for larger portfolios in comparison to our 2018 study.”
Regarding clients with a $1 million portfolio, advisors within broker-dealers charged higher fees than advisors within RIAs. Advisors in B-Ds charged a median fee of 1.1% versus a median of 1.0% within RIAs, Kitces.com found. A median fee of 1.0% was fairly consistent across all advisor segments, though solo advisors charged a median fee of 0.95%.
“Ultimately, the key point is that there does not appear to be any overall trend of decreasing financial planning fees, despite common claims that fee compression is coming for financial advisors,” Tharp said. “Rather, the trends we actually see in our financial advisor research are increasing fees. Furthermore, these trends are observed consistently across advisor fee models. Which suggests that, despite strong proclamations to the contrary, financial planning fee compression may be largely a mirage.”