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Life Health > Life Insurance

Why I Charge a Monthly AUM Fee

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In any business, it’s best to have a diversified stream of income. When you derive your income from multiple sources, you are better insulated against negative events, and hence, your business is more viable. To those of you who have been reading these posts I may repeat a few things, but it is necessary to provide a broad and concise perspective of my business income. My business is primarily fee-only and is derived from asset management fees, initial financial planning fees, financial planning renewal fees, and an occasional life insurance policy.

Like most of you, I charge a fee for managing client’s assets. Unlike many, I charge on a monthly basis. When I began, I analyzed this and found that not only does it provide me with a steadier income, but it actually works in the clients favor as it avoids the larger deductions of the quarterly cycle. As I have stated before, it works like dollar cost averaging in reverse. Smaller, more frequent deductions have a positive effect on a client’s portfolio when compared to the quarterly method. It is a little more work, but with technology, it’s really quite easy.

Financial Planning: Initial Fees

How much is a plan worth? How much are clients willing to pay? Assuming your planning document and advice are of high quality, this type of service can be worth a great deal. After all, how much is a client’s peace of mind worth? I typically charge between $1,500 and $4,000 per plan which includes all meetings, my time to put the document together, my advice, and any scenarios that may be needed. I collect the minimum (usually $1,500-$2,000) up front and the balance when I present the plan. <y planning agreement covers one full year.

Financial Planning Renewal Fees

After the first year, my planning fee is reduced and deducted quarterly from the clients account. The renewal fee covers: at least one plan update; an historical plan summary comparing the current plan with past plans; access to eVault, my online-central repository for client documents; and a membership with LifeLock Identity Theft Protection services. For this, I charge between $250 and $350 per quarter.

Life Insurance

I don’t do much here and when I do, I am compensated through a commission. I never lead with any product, including life insurance, but there are situations when it is prudent to acquire a policy.


I should mention that unless a client writes me a check, I deduct all fees from their taxable account. Any fee deducted from a client’s retirement account is not tax deductible. So if a client has a taxable account and an IRA, I deduct the entire fee from the taxable account.

I hope you find this informative and would love to hear how you approach this in your business.


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