How Financial Advisors Get Paid: 4 Fee Models Compared

How do financial advisors get paid?

Financial advisors are generally paid in one of four ways: a one-time project fee, a fixed ongoing fee, a percentage of the assets they manage, or commissions on products sold. Each model charges for something different, so each carries different costs and different incentives. Understanding the model helps you see what an advisor is rewarded for.

This article is general education, not personalized investment, tax, or legal advice. Fees, services, and terms vary by firm.

If you would like to compare these models against your own situation, you can talk through which payment model fits you.

The four models at a glance

Model	How you pay	Cost tends to scale with	A key question to ask
1. One-time, project-based	A set fee for a defined project	The scope of the work	What is included, and what happens after the work is delivered?
2. Fixed fee, ongoing	A set retainer, often billed monthly, quarterly, or annually	The scope of the work	How large is the fee compared with my account size?
3. AUM, ongoing	A percentage of the assets the advisor manages	Your account value	Is the schedule tiered, and how will my fee change as my account grows?
4. Paid based on product sales	Commissions, markups, or sales charges tied to what you buy	The products and transactions recommended	Does the advisor earn more if I choose one product over another?

The SEC's investor education site notes that how an adviser gets paid affects the conflicts of interest you should ask about. It suggests asking directly: "How are you paid for your services? What is your usual hourly rate, flat fee, or commission?" (Investor.gov, accessed October 16, 2026).

1. One-time, project-based fee

With a project-based fee, you pay a set price for a defined piece of work, such as a written financial plan. The engagement ends when the work is delivered. Some firms include a follow-up meeting, and some offer optional add-ons later.

Pros and cons of a one-time, project-based fee

• The cost is known up front. Trade-off: you pay it in one payment, and whether the total comes out lower or higher than an ongoing fee depends on how long you would otherwise stay with an advisor and what you need.
• There is no ongoing commitment. You typically keep the plan and decide what to do next. Trade-off: you generally carry out the plan yourself, and there is usually no ongoing monitoring or management unless you add it.
• The fee reflects scope, not account size. This can make planning accessible at a wide range of balances, including for people whose situation is complicated relative to their assets. Trade-off: scope varies widely, so a lower fee may cover less. Compare what is included, not only the price.
• The advisor is paid for the plan, not for selling a product. Trade-off: a plan reflects your information and assumptions on the date it was prepared. Life events, tax changes, and market conditions may mean it needs an update, which can mean another fee.

Where LKL Advisors fits

LKL Advisors offers a one-time financial plan for a flat $2,500. It includes an initial call, a client information intake, a detailed plan review, and one follow-up meeting available for six months after the plan review. The written plan is yours to keep, and the engagement does not include ongoing investment management or monitoring.

2. Fixed fee, ongoing

With an ongoing fixed fee, you pay a set retainer for continuing planning or advice, billed on a schedule such as monthly or quarterly. The amount is tied to the work involved rather than to the size of your accounts.

Pros and cons of an ongoing fixed fee

• The fee is predictable. It does not automatically rise when markets rise or when you add savings. Trade-off: a fixed fee can still change at renewal, and the agreement may limit how much service it covers.
• It can be a smaller share of a larger account. Because the fee does not grow with your balance, the percentage you pay may fall as your assets grow. Trade-off: the same dollar fee is a larger share of a smaller account, which is the main drawback of this model.
• You pay for advice, not for assets under management. This may suit people whose wealth is spread across places an advisor does not manage, such as workplace plans, real estate, or equity compensation. Trade-off: because the fee does not change with the effort involved, it is worth asking what you will receive and how often. The SEC's Regulation Best Interest adopting release summarizes research suggesting that flat-fee models can lead to under-service and overbilling, so this model has its own conflicts too (SEC, 2019).

When a fixed fee can be out of reach

A fixed fee can be well suited to a larger account and prohibitively expensive for a smaller one. The table shows the arithmetic using a round $10,000 annual fee. It is an illustration of how a fixed dollar amount compares with account size, not a quote, a benchmark, or a fee charged by LKL Advisors or any other firm.

Account size	A $10,000 annual fixed fee as a share of assets
$100,000	10.00%
$500,000	2.00%
$1,000,000	1.00%
$5,000,000	0.20%

Looking only at the percentage can be misleading, because a fixed-fee advisor may cover services beyond investments, and a smaller account may have fewer needs. Still, for someone with a modest balance, a retainer can take a meaningful portion of the assets each year. Compare the dollar amount, what it covers, and what else you could do with that money.

LKL Advisors does not price its ongoing service this way. Our ongoing service is priced as a percentage of assets, described next.

3. Assets under management (AUM), ongoing

With an AUM fee, you pay a percentage of the assets the advisor manages for you, usually billed quarterly and often deducted from the account. According to Investor.gov, the fee for advice is typically based on the value of the assets in your account with the adviser (accessed October 16, 2026). Depending on the firm, the fee may cover ongoing investment management alone or investment management plus planning.

Pros and cons of an AUM fee

• There is no large upfront payment. The fee is paid over time as a percentage. Trade-off: because it is deducted from the account, it is easy to overlook, and it reduces the amount that stays invested.
• The fee scales with your account. A smaller account pays fewer dollars, which can make ongoing service accessible at lower balances. Trade-off: the dollar fee rises as the account grows, even if the work involved does not.
• The advisor and client may both benefit when assets grow. Trade-off: the advisor also has a financial incentive to gather and keep assets under management. The SEC's Form CRS asks firms to describe conflicts created by their fees, and advisory firms commonly state in it that asset-based fees create an incentive to increase your account value. That incentive could weigh against steps such as paying down a mortgage, funding a home purchase, or keeping money in accounts the advisor does not manage.
• Ongoing service is typically bundled in. Trade-off: the scope varies. Some firms include planning, tax coordination, and estate coordination, while others cover investment management only. The SEC has also described "reverse churning," where a client pays an ongoing asset-based fee but receives little activity or service in return (SEC, Regulation Best Interest adopting release, 2019). You should always make sure you're getting the right service level, and you can see what is included in our services.

How to scrutinize an AUM fee

AUM pricing can be a reasonable way to pay for ongoing help, and the details matter. These are the questions worth asking before you sign.

1. Is the schedule tiered, and how? In a marginal (or "blended") schedule, each rate applies only to the slice of assets within its bracket. In other schedules, the entire balance is charged at the rate for the bracket it falls into. The two can produce very different fees at the same account size.
2. How does the rate change as my account grows? Ask where the breakpoints are, how much the rate drops at each one, and what the dollar fee would be at a few account sizes. A lower rate can still mean a larger dollar fee.
3. Which assets are counted? Some firms charge only on assets they manage, while others include held-away accounts.
4. What is included? Ask whether planning, tax coordination, and estate coordination are part of the fee or priced separately.
5. What other costs apply? Fund expenses, custodian fees, and transaction charges are often separate from the advisory fee (see the Form CRS examples on Investor.gov).
6. How is the fee calculated and billed? Ask whether it is charged in advance or in arrears and which balance it is based on.

How LKL Advisors prices an AUM fee

LKL Advisors publishes its ongoing fee schedule on the pricing page: 0.75% on the first $500,000, 0.50% from $500,001 to $5,000,000, and 0.25% above that, with no account minimums. The tiers are marginal, which means each rate applies only to the assets in its bracket. Applying the schedule published as of October 16, 2026:

• On $500,000 managed, the annual fee is $3,750 (0.75%).
• On $1,000,000 managed, the annual fee is $6,250: $3,750 on the first $500,000 plus $2,500 on the next $500,000, a blended rate of 0.625%.

Notice the pattern a tiered schedule can create: the blended rate falls as the account grows, while the dollar fee still rises. The fee applies only to the assets we manage directly, and the planning covers all of your accounts, including a workplace plan. Like any asset-based fee, ours means we earn more when the assets we manage grow, and that is a conflict worth asking us about. These figures show the arithmetic of our published schedule. They are not a projection of results or a quote for your situation. Our Form ADV Part 2A describes the terms that apply, and you can see our services for what the fee includes.

4. Paid based on product sales (commissions)

With product-based pay, the professional is compensated when you buy, sell, or hold certain products. According to Investor.gov, brokers typically work on a transactional basis, and you pay a commission or markup each time you buy or sell an investment (accessed October 16, 2026). Other forms of pay include sales loads on some mutual funds and ongoing payments built into a product's expenses. The SEC lists commissions, markups and markdowns, loads, revenue sharing, and Rule 12b-1 fees as examples of compensation that can vary with the advice given (SEC, Regulation Best Interest adopting release, 2019).

Pros and cons of commission-based pay

• There may be no ongoing advisory fee. The SEC has noted that someone who intends to buy and hold a long-term investment may find a one-time commission more cost effective than an ongoing advisory fee for holding the same investment. Trade-off: product-level costs, such as fund expenses, can continue after the sale.
• It can be accessible with limited assets. The SEC has noted that people who have not yet reached an advisory account minimum may benefit from broker recommendations. Trade-off: the help is usually tied to a transaction, so it may not include broad planning or ongoing monitoring.
• The cost is paid when you buy, not as a separate bill. Trade-off: compensation is often embedded in the product's price, so it can be harder to see than a fee on a statement.

The risk of misaligned incentives

The central issue with this model is that income depends on what is sold, and not on whether the product fits you. That structure can create incentives that point away from your interests:

• Higher-paying products may be favored. Compensation can differ from one product to another, which may create an incentive to recommend the one that pays more.
• Activity may be rewarded over patience. When pay comes from each transaction, there is more income in trading than in doing nothing.
• Advice that pays nothing may get less attention. Paying down debt, keeping cash available, or choosing a lower-cost alternative may not generate compensation for the person recommending.
• Proprietary products may be offered. Some firms offer only their own products or a limited menu.

None of this means every professional paid this way acts against a client's interest. Investor.gov notes that brokers are required to act in your interest when making a recommendation and must not put their own interest ahead of yours, and it also says the way brokers make money creates conflicts you should ask about (accessed October 16, 2026). The SEC's Regulation Best Interest requires brokers to disclose and address conflicts, and it did not eliminate commission-based compensation (SEC, 2019). Some professionals are also paid both ways, with an advisory fee and commissions. The term "fee-based" does not by itself tell you that no commissions are involved. Read the firm's Form CRS, which has a section titled "How do your financial professionals make money?"

Questions to ask:

• Do you earn more if I choose one product over another?
• Are any of the products you offer proprietary to your firm?
• How are you paid if I decide not to buy anything?
• What ongoing costs come with this product, and who receives them?

LKL Advisors does not receive commissions. We are paid directly by clients, through the flat fee for a one-time plan or the percentage-of-assets fee for ongoing service.

Every model has trade-offs

No model removes conflicts of interest. The SEC's adopting release for Regulation Best Interest summarizes research finding that conflicts can exist in all forms of compensation: commissions can encourage selling, asset-based fees can discourage reducing the assets managed, and flat fees can lead to under-service (SEC, 2019). The practical step is to learn which conflicts apply to the advisor you are considering and how the advisor addresses them.

Which model fits can depend on your situation. Someone who wants a plan and prefers to manage the investing may look at a project fee. Someone who wants ongoing help may compare fixed and asset-based pricing at their own account size. Fees are also only one input to the bigger picture. Our guide to the financial order of operations covers how to think about where your next dollar goes.

What to bring to a planning conversation

When you talk with any advisor about fees, it helps to come prepared:

• The advisor's Form CRS and Form ADV Part 2A (Item 5 covers fees and compensation)
• A list of your accounts, including workplace plans and accounts held away from the advisor, with current balances
• Recent statements showing what you currently pay in advisory fees and fund expenses
• A fee schedule in writing, with the dollar amount at your account size and at a larger size
• Your goals and the kinds of help you want, such as a one-time plan, ongoing planning, or investment management
• A list of questions about how the advisor is paid and what conflicts may apply

How we approach it at LKL Advisors

LKL Advisors is based in Atlanta, Georgia, and works with clients across the country, with planning done remotely. We offer two published ways to work together: a one-time financial plan for a flat $2,500, and ongoing service priced by the tiered percentage schedule on our pricing page. There are no account minimums. You can see everything our services include, and when you are ready to compare these models against your own accounts, you can talk through which payment model fits your situation.

Frequently asked questions

What is a normal fee to pay a financial advisor?

There is no single normal fee. What you pay depends on the pay model, the scope of services, your account size, and the firm. Ask for the fee in dollars at your account size, and read the firm's Form CRS and Form ADV Part 2A to see what is included.

Is a 1% management fee high?

Whether 1% is high depends on what the fee covers, how the schedule is tiered, and how it compares with your other options. A percentage fee also becomes a larger dollar amount as your account grows. Compare the dollar fee, the scope of service, and any other costs, rather than the percentage alone.

Which way of paying an advisor is right for me?

It depends on your balance, the kind of help you want, and how comfortable you are carrying out a plan yourself. A one-time project fee may fit someone who wants a plan and prefers to manage it. Ongoing models may fit someone who wants continuing support, and each carries its own trade-offs and conflicts.

Does "fee-based" mean an advisor is not paid commissions?

Not necessarily. Some professionals are paid both an advisory fee and commissions on certain products. Check the firm's Form CRS and Form ADV to see all the ways the firm and its professionals are paid.

Where can I find out how an advisor is paid?

Start with the advisor's Form CRS, which summarizes services, fees, and conflicts. Registered advisers also file a Form ADV, and you can look up a firm and its professionals for free at Investor.gov/CRS and adviserinfo.sec.gov.

Does LKL Advisors receive commissions?

No. LKL Advisors is paid directly by clients, through a flat fee for a one-time plan or a percentage-of-assets fee for ongoing service. Our published fee schedule is on our pricing page.

Sources

• Investor.gov, Investment Advisers, accessed October 16, 2026
• Investor.gov, Brokers, accessed October 16, 2026
• SEC Office of Investor Education and Assistance, How Fees and Expenses Affect Your Investment Portfolio, Investor Bulletin, July 23, 2025, accessed October 16, 2026
• SEC, Regulation Best Interest: The Broker-Dealer Standard of Conduct (Release No. 34-86031), June 5, 2019, accessed October 16, 2026
• FINRA, Investment Advisers, accessed October 16, 2026

---

LKL Advisors is based in Atlanta, Georgia, and works with clients across the country, wherever we are registered or otherwise permitted to serve them. Planning is done remotely through secure virtual platforms, so you do not need to be in Atlanta to work with us.