Would You Write That Check?
Pay for what you get and get what you pay for.
The wealth management industry has a reliable answer to every fee criticism: we do more than manage investments. We provide comprehensive financial planning. Tax guidance. Estate planning coordination. Behavioral coaching. The relationship itself has value.
The industry has never priced those services transparently.
Here is the question that argument requires: if the planning services your wealth manager provides were billed as a separate line item, an invoice, arriving each January, for the financial planning work performed over the prior year what would that invoice say? And would you pay it?
For a client with a $2 million portfolio paying a 1% annual AUM fee, the answer is $20,000. For a $5 million client, it is $50,000. These are not hypothetical figures. They are what the bundled fee extracts every year, compounding indefinitely, regardless of how many planning conversations took place.
What Financial Planning Actually Consists Of
The financial planning services most wealth managers describe are real. They are also largely standardized, and the market has already priced them unbundled.
A comprehensive annual financial review typically covers investment policy, asset allocation, tax-loss harvesting opportunities, beneficiary designation review, insurance adequacy, and coordination with an estate attorney or CPA. For a client whose affairs are not unusually complex, this work requires one substantive annual meeting, perhaps two or three follow-up calls, and some document review.
Fee-only financial planners, professionals who charge by the hour or by annual retainer rather than as a percentage of assets provide precisely these services. Their fees are publicly available and consistently documented. A comprehensive annual financial plan from a fee-only planner typically costs between $2,000 and $7,500 per year depending on complexity. Ongoing advisory relationships with quarterly check-ins run $3,000 to $10,000 annually for most clients.
The National Association of Personal Financial Advisors, whose members are required to operate on a fee-only basis, maintains a directory of planners and their fee structures. The market has spoken on what this work is worth. It has spoken at a price point that is a fraction of what AUM-based fees extract from clients with meaningful portfolios.
The Bundled Fee Is Not a Price. It Is a Concealment.
A 1% AUM fee on a $1 million portfolio produces $10,000 in annual revenue for the advisor. On a $3 million portfolio, it produces $30,000. On a $10 million portfolio, $100,000. Yes, some advisors tier the fee amount based on asset size, but the fee remains high given the time typically devoted to each client. Indeed, the larger clients tend to take less time for the manager. The planning services provided to each of these clients are, in most cases, nearly identical in scope and time required. The fee scales with assets. The work does not.
This is not incidental. It is the architecture of the business model. The AUM fee structure transfers wealth from clients to advisors in proportion to the client’s assets, not in proportion to the value delivered. A client who doubles their portfolio through diligent saving and market appreciation automatically doubles their advisory fee without any additional service being rendered.
No other professional service operates this way. An attorney does not charge more for the same contract review because her client’s net worth increased. An accountant does not double her tax preparation fee because a client’s portfolio grew. The premise that financial planning services should scale with assets is not supported by the economics of delivering those services. It is supported by the industry’s success in preventing clients from examining the premise directly.
The Behavioral Mechanism
Kahneman and Tversky’s research on decision-making explains why this arrangement persists without challenge. Two findings are directly relevant.
The first is the bundling effect on loss perception. When costs are embedded in a single transaction or relationship, they are psychologically treated as a single loss rather than multiple discrete ones. A client who pays $30,000 per year in AUM fees does not experience thirty thousand-dollar withdrawals. The fee is deducted from account performance, absorbed into the quarterly statement, and never presented as an invoice that requires client approval. The loss is invisible because it is never isolated for evaluation, although some states require informational notice of advisor fees, all do not.
The second is what Kahneman and Tversky called the “sunk cost” dimension of reference point adjustment. After years in an advisory relationship, the fee becomes part of the client’s baseline expectation. Questioning it feels not like prudent analysis but like disrupting something that has been working. The reference point has shifted to include the fee as a normal cost of the arrangement. What began as a decision becomes a default.
The industry understands both mechanisms. The bundled, percentage-based, asset-linked fee structure was not designed for the client’s convenience. It was designed to make the cost of the relationship as difficult as possible to isolate, evaluate, and challenge.
The Institutional Standard, Again
Institutional investors, pension funds, endowments, foundations do not typically pay their investment consultants and financial advisors on an open-ended AUM basis, or if so, the fee is tiered to comport with the duties provided. They typically negotiate specific fees for specific services: investment policy development, manager selection, performance reporting, and ongoing monitoring. The fees are disclosed, documented, and subject to regular review by fiduciaries whose job is to question them, often with annual renewal clauses.
When an institutional client retains an investment consultant, the engagement letter specifies what services will be rendered and what they will cost. The consultant cannot unilaterally collect more simply because the portfolio grew. The relationship is structured around accountability.
Individual investors with $1 million, $3 million, or $10 million in assets have no less at stake than a small pension fund. They are simply not equipped with the same institutional due diligence infrastructure or the same expectation that the fee arrangement should be examined.
The Question the Invoice Answers
Evaluating whether the planning services bundled into your AUM fee are worth their implicit cost requires only one step: separate the investment management question from the financial planning question and price each independently.
For investment management: does your advisor’s net-of-fee performance justify the active fee relative to a low-cost index alternative? This question was addressed in the prior piece in this series. The answer, for most advisors measured honestly over full market cycles, is no.
For financial planning: what specific services were rendered in the past twelve months? How many hours of professional time were involved? What would a fee-only planner have charged for the same work? The gap between that number and what your AUM fee extracted is the premium you paid for the bundled arrangement.
For most clients with portfolios above $1 million, that gap is not a rounding error. It is a second mortgage payment. It is a grandchild’s college education. It is, compounded over the decades of a wealth management relationship, a material fraction of the estate they intended to leave behind.
Pay for What It Is Worth. Know What That Number Is.
Competent financial planning has genuine value. Annual reviews, tax coordination, estate document alignment, and behavioral guidance during market dislocations are services worth paying for — at a price that reflects the actual scope of work.
If the planning services your advisor provides are worth $15,000 per year, pay $15,000 per year. Negotiate a retainer that reflects the actual scope of work. Separate the investment management fee from the planning fee and evaluate each on its own merits.
What the industry resists strenuously, structurally, and with considerable success is exactly that transparency. Because the moment the invoice is itemized, the client can read it. And a client who can read the invoice is a client who can question it.
The question is not whether financial planning is worth paying for.
The question is whether you know what you are paying.
Andrew Parrillo is the Managing Member of Parrillo Investors LLC, a registered investment advisor and the author of “Beat the Wealth Management Hustle.” This is the fourth in a series of five articles examining the economics of wealth management. Complementary tools to calculate fee impact and assess behavioral risk are available at parrilloinvestors.com.
Fee-only financial planner cost ranges cited in this article are based on published fee schedules from members of the National Association of Personal Financial Advisors (NAPFA) and the Garrett Planning Network, and reflect typical annual engagement costs for clients with portfolio values between $1 million and $5 million as of 2025. Individual fees vary by advisor, geography, and scope of engagement.
Work with Andrew directly
If this raises questions about your own portfolio, I offer a free 30-minute review — no cost, no sales pitch, just an honest assessment of whether what you are paying is justified. Book at parrilloinvestors.com/free-review or directly at calendly.com/andrewparrillo/zoom-meeting.