From the Flat-Fee Pricing hub — Evergreen Wealth Management — flat-fee fiduciary planning for Massachusetts retirees and pre-retirees, a flat monthly fee, bundled.

A 1% AUM (assets under management) fee on a $1 million portfolio costs you $10,000 in the first year. But that number is misleading — because the real cost isn’t what you pay this year. It’s the hundreds of thousands of dollars that quietly disappear over the course of your retirement. I ran the numbers for three real-world portfolio sizes, and the results surprised even me.

How the 1% AUM Fee Actually Works

Most people hear “1%” and think it sounds reasonable. And in isolation, it is. One percent of $1 million is $10,000 — roughly what you’d pay a CPA for a complicated tax return. But here’s what makes AUM fees different from almost any other professional fee you’ll ever pay: they compound against you. Every dollar taken in fees is a dollar that can no longer grow. Over 10, 20, or 30 years, that missing growth adds up to far more than the fee itself. It’s the financial equivalent of a slow leak in a tire. You don’t notice it on any given day — but over a long drive, you end up on the side of the road.

The Year-by-Year Math: Three Real Scenarios

I modeled three portfolio sizes that represent the clients I typically work with — people in their late 50s or 60s, either approaching retirement or recently retired. I assumed a 7% average annual return (the long-run stock/bond blended average), and compared two scenarios: paying 1% AUM vs. paying a flat monthly fee. These aren’t hypothetical. These are the actual dollar amounts.

Scenario 1: $750,000 Portfolio

The $10,000 figure is an illustration; Evergreen’s current fee is on our fee page.

Year	Portfolio (1% AUM)	AUM Fees Paid	Portfolio (flat-fee advisor $10,000/yr, illustrative)	Flat Fees Paid	You Keep More With
1	$794,475	$7,500	$791,800	$10,000	AUM (by $2,675)
5	$1,000,360	$42,219	$990,381	$50,000	AUM (by $9,979)
10	$1,334,292	$98,532	$1,327,528	$100,000	AUM (by $6,764)
15	$1,779,696	$173,642	$1,800,393	$150,000	Flat fee (by $20,697)
20	$2,373,781	$273,825	$2,463,612	$200,000	Flat fee (by $89,831)
25	$3,166,180	$407,450	$3,393,810	$250,000	Flat fee (by $227,630)
30	$4,223,091	$585,681	$4,698,461	$300,000	Flat fee (by $475,370)

At $750K, the AUM model is slightly cheaper in the early years — we’re talking about $100/month difference. The crossover happens around year 12. After that, the gap accelerates relentlessly, and by year 30, you’ve kept over $475,000 more under the flat-fee model.

Scenario 2: $1,500,000 Portfolio

Year	Portfolio (1% AUM)	AUM Fees Paid	Portfolio (flat-fee advisor $10,000/yr, illustrative)	Flat Fees Paid	Flat Fee Savings
1	$1,588,950	$15,000	$1,594,300	$10,000	$5,350
5	$2,000,719	$84,438	$2,042,295	$50,000	$41,576
10	$2,668,585	$197,063	$2,802,891	$100,000	$134,306
15	$3,559,392	$347,284	$3,869,667	$150,000	$310,275
20	$4,747,563	$547,650	$5,365,875	$200,000	$618,312
25	$6,332,360	$814,900	$7,464,384	$250,000	$1,132,024
30	$8,446,182	$1,171,363	$10,407,652	$300,000	$1,961,470

At $1.5 million, the flat fee wins from day one — and the gap doesn’t just grow, it explodes. By year 20, you’ve kept an extra $618,000 in your account. By year 30, nearly $2 million. Let that sink in: the difference between the two fee models on a $1.5M portfolio is more than $2 million over 30 years. That’s not a rounding error. That’s a paid-off vacation home, a fully funded legacy for your kids, or an extra decade of financial security.

Scenario 3: $3,000,000 Portfolio

Year	Portfolio (1% AUM)	AUM Fees Paid	Portfolio (flat-fee advisor $10,000/yr, illustrative)	Flat Fees Paid	Flat Fee Savings
1	$3,177,900	$30,000	$3,199,300	$10,000	$21,400
5	$4,001,438	$168,877	$4,146,122	$50,000	$144,684
10	$5,337,169	$394,126	$5,753,618	$100,000	$416,449
15	$7,118,784	$694,567	$8,008,214	$150,000	$889,430
20	$9,495,125	$1,095,299	$11,170,402	$200,000	$1,675,277
25	$12,664,719	$1,629,801	$15,605,533	$250,000	$2,940,814
30	$16,892,364	$2,342,726	$21,826,035	$300,000	$4,933,671

At $3 million, the 1% AUM fee costs you nearly $5 million more over 30 years than a flat fee. Your AUM advisor would collect $2.3 million in total fees — nearly the value of your original portfolio. Meanwhile, the flat-fee client’s account grew to nearly $22 million vs. under $17 million for the AUM client. Same investments, same returns, same advice — nearly a $5 million difference.

Why the Gap Gets Bigger Every Year

The reason the flat fee wins by more and more over time comes down to one thing: the AUM fee grows as your portfolio grows, but the flat fee doesn’t. In year one on a $1.5M portfolio, the difference between $15,000 (AUM) and $10,000 (flat) is $5,000. Seems modest. But that $5,000 also grows at 7% for the remaining 29 years. And next year the gap is even bigger — because the portfolio grew, so the AUM fee went up, but the flat fee stayed the same. This is a compounding problem working against you. The fee drag doesn’t just take money out of your account. It removes the future growth of that money.

“But My Advisor Might Get Better Returns”

This is the most common pushback, and it deserves a straight answer: probably not. The SPIVA scorecard — the most comprehensive study of active manager performance — consistently shows that over 15-year periods, roughly 88-92% of actively managed funds underperform their benchmark index. Your advisor’s stock-picking ability is extremely unlikely to make up for a 1% annual drag. The value of a good advisor isn’t beating the market. It’s tax planning, withdrawal sequencing, Social Security timing, estate coordination, and keeping you from making emotional decisions during a downturn. Those services are worth paying for — the question is how you pay for them.

When Does an AUM Fee Actually Make Sense?

I want to be fair here, because the flat-fee model isn’t the right fit for everyone. AUM fees can make more sense if your portfolio is under $300,000-$400,000. At that level, a 1% fee ($3,000-$4,000/year) may actually be less than most flat-fee advisors charge. The crossover point depends on the advisor, but as a general rule: the larger your portfolio, the worse the AUM model looks for you. AUM can also be reasonable if you genuinely want your advisor’s compensation tied to performance — though I’d argue that creates its own set of misaligned incentives.

What a Flat-Fee Advisor Actually Charges

Flat-fee models vary, but here’s the general landscape in 2026:

Hourly advisors: $200-$400/hour for project-based work (no ongoing relationship)
Annual retainer advisors: $4,000-$12,000/year depending on complexity
Monthly subscription advisors: $500-$1,500/month for comprehensive, ongoing planning

At Evergreen Wealth Management, we charge a flat monthly fee that covers comprehensive financial planning, investment management through Schwab, tax planning, retirement income strategy, and ongoing access to me directly — not a call center, not a rotating team of associates. The fee doesn’t go up when your portfolio goes up. If your investments have a great year, you keep the gains — not your advisor.

How to Calculate Your Own AUM Fee Drag

Here’s a quick formula you can use right now:

Take your current portfolio balance
Multiply by your AUM fee (usually 0.75% to 1.25%)
That’s this year’s cost
Now multiply your portfolio by 1.07 (assuming 7% growth)
Multiply that by the AUM fee
That’s next year’s cost — already higher, even though you didn’t add a dime

Repeat this for 20 years and you’ll see why the “just 1%” narrative breaks down. Or skip the math entirely: Schwab’s investment fee calculator will run the numbers for you in about 30 seconds.

The Bottom Line

A 1% AUM fee isn’t outrageous — but it isn’t “just 1%” either. On a $750K-$3M portfolio over a 20-30 year retirement, the total cost difference between AUM and flat-fee models ranges from over $475,000 to nearly $5 million depending on your portfolio size. That’s not a philosophical difference. That’s real money that either stays in your retirement account or goes to your advisor. The advice is the same either way — the same financial planning, the same investment strategy, the same phone calls when the market drops 15%. The only question is how you want to pay for it. If you’re curious about what the flat-fee model would look like for your specific situation, we’re happy to walk you through it. No commitment, no pressure — just math.

Nick Stevens, CFP® is the founder of Evergreen Wealth Management in Boston, a flat-fee financial planning and investment management firm. Evergreen charges a fixed monthly fee regardless of portfolio size — because your financial advice shouldn’t get more expensive just because your investments did well. Learn more about how we work or get in touch.

What Does a 1% Financial Advisor Fee Actually Cost? The Real Math Most People Never See