Investing
Zoe Team
11 min read
AUM relationships provide access to professional expertise and personalized investment management.
Clients benefit from tax-efficient strategies and comprehensive portfolio rebalancing performed by advisors.
Managed relationships often offer behavioral coaching, helping investors stay disciplined during market volatility.
Assets Under Management, referring to the total market value of investments that an advisor manages for a client.
Fees are typically a percentage of the total assets managed, aligning the advisor’s success with the client’s growth.
Access to professional asset allocation, tax optimization, and ongoing strategic financial guidance.
Brooke Thomas Senior Client Excecutive, Zoe Financial
Brooke Thomas Senior Client Executive, Zoe
One of the most important decisions when considering working with a financial advisor is determining the kind of relationship you want. Assets under management (AUM) relationships have repeatedly proven beneficial for most individuals with investable assets seeking the benefits of a financial advisor.
One of the most important decisions when considering working with a financial advisor is determining the kind of relationship you want. Advisor relationship types are based on the fee structure you choose. The two primary ways to pay for an advisor’s services are a flat fee or an assets under management (AUM) fee.
The type of advice you seek often impacts the fee relationship you choose. If you’re looking for financial planning-only advice, which incorporates areas such as retirement planning, tax planning, and estate planning, you will likely pay a fixed sum (a flat fee) for their guidance for a given period of time.
Conversely, an advisor who can manage your investments and provide financial planning may be more to your liking. The advisor will then charge a fee (e.g. 1%) based on the total value of investments managed. This is referred to as an assets under management relationship (AUM). The fee you pay is based on the investment assets the advisor manages. Pretty self-explanatory!
So how do you know what type of relationship you’re looking for? Imagine you’re hiring a personal trainer for your finances. In one instance, your personal trainer gets paid regardless of your results. This would be the equivalent of a flat fee relationship. In an AUM-style relationship, your personal trainer earns more as you get more in shape, and they earn less if you don’t.
Each relationship type has its merits. In situations where an individual has not yet accumulated wealth or is in non-investable assets, such as real estate or stock options, there is still tremendous value in working with an advisor in a flat-fee capacity. Nonetheless, an AUM relationship has repeatedly proven beneficial for most individuals with investable assets seeking the benefits of a financial advisor. Outlined below are some of the most meaningful differences between an AUM relationship versus a flat fee relationship.
Most people want their advisor’s incentives aligned with growing and protecting their wealth. In an AUM relationship, an advisor is compensated by a percentage of the portfolio he or she manages. As your portfolio increases, so does the fee earned by your advisor. Likewise, when your portfolio takes a hit, the advisor sees a decrease in their compensation. Because your advisor’s pay is directly linked to how your investments are doing, they are financially incentivized to grow and protect it.
In a flat fee arrangement, advisors are paid the same amount regardless of how your investments perform. Whether your portfolio does well based on your goals or is adversely impacted, the advisor is paid exactly the same.
Having financial planning and investment management under the same roof ensures a better alignment of your long-term financial goals and investment strategy. Your financial goals are the north star. Whether it be a specific lifestyle in retirement, a relocation abroad, or putting your children through college, your investment strategy is the financial means to attain those goals.
The larger the gap between your financial plan and investment strategy, the more room for errors or ineffective execution. The separation between where your financial plan is created and where your investments are managed can have consequential effects on your wealth.
Imagine you hired a personal trainer in an attempt to build muscle (your financial goal). The exercises to help you get there (investment implementation) will look drastically different than if your goal was to lose weight. Your workout plan, diet, and consistency determine your end results. Having your personal trainer work with you to establish your goals and help you through your workouts and meal plans increases the odds you will reach your goals. A recent Vanguard study found that advisor-managed portfolios average 8% annualized growth over 25 years, compared to just 5% when self-managed.
After initial consultations with your advisor, your portfolio will be aligned with your goals and risk tolerance. But in flat-fee relationships, it can be tough to see continuous value delivered, leading people to fire their advisors. Left to one’s own accords, life gets in the way, and investment management is usually the first thing to go.
Let’s face it, dedicating time to build and monitor investment portfolios aligned with our goals, risk tolerance, and capacity, all without letting your emotions get in the way, is hard work. Often, one takes either more or less risk than one should.
Picture your trainer giving you a workout plan. They have written out every warm-up, exercise, and cool-down in elaborate detail, but you’re on your own to do it. You start out strong. You execute the exact schedule suggested. But as time passes, you lose some of that initial vigor. You stop doing the entire cool-down. You take a day off once a week that turns into two. You’re not lazy, but you start to lose sight of your goal between juggling work, family, and friends. Having your trainer in the workouts with you, ensuring you’re doing all of your reps, and changing the workout plan as needed increases the likelihood and efficiency of achieving your goals.
With other priorities in life, the investment portfolio drifts away from the goals you set out to achieve. This might make you take more risks in the future to compensate for the lack of early performance. Having an ongoing relationship with the advisor will help with the investments and lead to higher accountability and, thus, better outcomes.
One of the biggest reasons individuals hire a financial advisor in the first place is that they don’t have the bandwidth to build a comprehensive financial plan. Within their busy lives, they don’t have the time to review tax codes or run different financial models to plan out their financial future. Why, then, would things be any different regarding your investment strategy?
Some investors think that if an advisor isn’t trading stocks frequently, their investment approach is very simple and thus can be handled on their own. This fails to consider that there are still many behind-the-scenes weekly tasks to manage the portfolio’s risk profile and create tax efficiencies, namely rebalancing and tax loss harvesting.
Advisors can rebalance your portfolio and perform tax loss harvesting on your behalf, both of which are time-sensitive events requiring understanding and expertise. If executed incorrectly or at the wrong time, you will miss out on financially beneficial opportunities, your portfolio could be incorrectly allocated, or you could face costly tax repercussions. If you are already working with an advisor to manage your financial planning, then you can further delegate your investments. It’s almost as if your personal trainer is doing the push-ups for you!
How often are you reviewing your portfolio? Are you dedicating hours of your week to it? When life gets hectic, are you still able to devote that same level of attention, or does monitoring your investments start to take a backseat?
Another considerable benefit of having an advisor manage your portfolio is the increased time and attention in assessing market conditions and performing due diligence on investment products. No one knows what the market will do next. But a sophisticated financial advisor will constantly assess if there have been significant changes to the investment landscape that can disrupt your portfolio from achieving its goal. For instance, in the last few years, a tilt in a portfolio’s bond allocation to protect it against a rising interest rate environment would have lasting effects on protecting your wealth.
Your finances are an emotionally charged topic. Most investors understand the logic of “buy low, sell high” and why spending time in the market is important rather than trying to time the market. Still, it’s much more difficult to adhere to this logic in the face of market & economic turbulence.
One of the most critical benefits of having an advisor manage your investments is that they don’t have the personal emotional baggage attached to your investments and thus can be more level-headed when there are large swings in the market or a lot of hype around trendy new investments. It is an understandable urge to shift your investments to a less risky vehicle when the market takes a hit or to jump on the bandwagon of very hot stock. These behavioral impulses are understandable but can also result in serious taxable events and weighty losses.
An experienced financial advisor will have an even-tempered view of whether external events merit a material change in your investment strategy or whether it’s merely normal volatility that occurs with being invested in the stock market. No one can predict the markets, including financial advisors, but as the old saying goes, it is important that “cooler heads prevail.”
The most common misconception about an AUM relationship versus a flat fee relationship is that an AUM is more expensive. Because of the increase in many low-cost investment platforms and Robo-advisor offerings, it’s easy to assume that it would be cheaper to manage your investments yourself and hire an advisor to do the financial planning. This isn’t necessarily true.
The vast majority of financial advisors charge on a tiered structure. As advisors manage more of your portfolio, the overall percentage fee that they charge decreases. As advisors begin to manage more assets, different breakpoints take effect, so a 100% increase in money management does not result in a 100% increase in fees.
Additionally, we’ve seen clients paying more for a flat fee engagement than they would have if they had engaged in an AUM relationship. For example, we often see clients paying around $5k due to the complexity of their financial picture when if they had moved over their $300k assets, they would have paid only $3k per year. Not only would they pay less, but they would have gotten a broader service as the advisor would have been doing the investment management, rebalancing, and tax harvesting. When you combine these considerations, pursuing a flat fee relationship where you must manage your own investments is not necessarily a cheaper option than an AUM relationship.
While AUM relationships have been the primary relationship type throughout the history of the wealth management space, the flat fee model is a relatively newer structure. As with most well-established services, AUM fee models have developed a fairly common market price. It is common in the world of independent financial advisors to see a fee of 1% for asset management, with a range of 0.6% to 1.2% derived by the size of the managed portfolio and the inclusion of any additional services. On average, 1% is the market price for an AUM relationship.
Flat fee relationships, however, do not currently have a well-established market price. There is a push in the industry to develop some uniformity, but there is still great variability. When holding constant the advisor’s experience and the complexity of services offered, you can still see variability in cost between advisors that can be thousands of dollars in difference. This inconsistency can make it difficult to be certain that you are getting charged a fair and reasonable price for your service.
Providing clients with different options to pay for a service is a net positive development for the industry to become more client-centric. Flat-fee relationships make a lot of sense in many instances. Young high-earning individuals who don’t have much wealth yet and likely have student debt can greatly benefit from a flat-fee relationship. Real estate investors who have most of their wealth in illiquid properties rather than equities can still reap major benefits from flat-fee. People with a one-off complex question are better off hiring an advisor who charges them per hour.
With benefits such as consistent goal monitoring, aligned incentives, and truer market prices, people who primarily have their wealth in traditional investment vehicles will reap the most benefit from working with an advisor in an assets under-management relationship.
Brooke Thomas Senior Client Excecutive, Zoe Financial
Brooke Thomas Senior Client Executive, Zoe
One of the most important decisions when considering working with a financial advisor is determining the kind of relationship you want. Assets under management (AUM) relationships have repeatedly proven beneficial for most individuals with investable assets seeking the benefits of a financial advisor.
One of the most important decisions when considering working with a financial advisor is determining the kind of relationship you want. Advisor relationship types are based on the fee structure you choose. The two primary ways to pay for an advisor’s services are a flat fee or an assets under management (AUM) fee.
The type of advice you seek often impacts the fee relationship you choose. If you’re looking for financial planning-only advice, which incorporates areas such as retirement planning, tax planning, and estate planning, you will likely pay a fixed sum (a flat fee) for their guidance for a given period of time.
Conversely, an advisor who can manage your investments and provide financial planning may be more to your liking. The advisor will then charge a fee (e.g. 1%) based on the total value of investments managed. This is referred to as an assets under management relationship (AUM). The fee you pay is based on the investment assets the advisor manages. Pretty self-explanatory!
So how do you know what type of relationship you’re looking for? Imagine you’re hiring a personal trainer for your finances. In one instance, your personal trainer gets paid regardless of your results. This would be the equivalent of a flat fee relationship. In an AUM-style relationship, your personal trainer earns more as you get more in shape, and they earn less if you don’t.
Each relationship type has its merits. In situations where an individual has not yet accumulated wealth or is in non-investable assets, such as real estate or stock options, there is still tremendous value in working with an advisor in a flat-fee capacity. Nonetheless, an AUM relationship has repeatedly proven beneficial for most individuals with investable assets seeking the benefits of a financial advisor. Outlined below are some of the most meaningful differences between an AUM relationship versus a flat fee relationship.
Most people want their advisor’s incentives aligned with growing and protecting their wealth. In an AUM relationship, an advisor is compensated by a percentage of the portfolio he or she manages. As your portfolio increases, so does the fee earned by your advisor. Likewise, when your portfolio takes a hit, the advisor sees a decrease in their compensation. Because your advisor’s pay is directly linked to how your investments are doing, they are financially incentivized to grow and protect it.
In a flat fee arrangement, advisors are paid the same amount regardless of how your investments perform. Whether your portfolio does well based on your goals or is adversely impacted, the advisor is paid exactly the same.
Having financial planning and investment management under the same roof ensures a better alignment of your long-term financial goals and investment strategy. Your financial goals are the north star. Whether it be a specific lifestyle in retirement, a relocation abroad, or putting your children through college, your investment strategy is the financial means to attain those goals.
The larger the gap between your financial plan and investment strategy, the more room for errors or ineffective execution. The separation between where your financial plan is created and where your investments are managed can have consequential effects on your wealth.
Imagine you hired a personal trainer in an attempt to build muscle (your financial goal). The exercises to help you get there (investment implementation) will look drastically different than if your goal was to lose weight. Your workout plan, diet, and consistency determine your end results. Having your personal trainer work with you to establish your goals and help you through your workouts and meal plans increases the odds you will reach your goals. A recent Vanguard study found that advisor-managed portfolios average 8% annualized growth over 25 years, compared to just 5% when self-managed.
After initial consultations with your advisor, your portfolio will be aligned with your goals and risk tolerance. But in flat-fee relationships, it can be tough to see continuous value delivered, leading people to fire their advisors. Left to one’s own accords, life gets in the way, and investment management is usually the first thing to go.
Let’s face it, dedicating time to build and monitor investment portfolios aligned with our goals, risk tolerance, and capacity, all without letting your emotions get in the way, is hard work. Often, one takes either more or less risk than one should.
Picture your trainer giving you a workout plan. They have written out every warm-up, exercise, and cool-down in elaborate detail, but you’re on your own to do it. You start out strong. You execute the exact schedule suggested. But as time passes, you lose some of that initial vigor. You stop doing the entire cool-down. You take a day off once a week that turns into two. You’re not lazy, but you start to lose sight of your goal between juggling work, family, and friends. Having your trainer in the workouts with you, ensuring you’re doing all of your reps, and changing the workout plan as needed increases the likelihood and efficiency of achieving your goals.
With other priorities in life, the investment portfolio drifts away from the goals you set out to achieve. This might make you take more risks in the future to compensate for the lack of early performance. Having an ongoing relationship with the advisor will help with the investments and lead to higher accountability and, thus, better outcomes.
One of the biggest reasons individuals hire a financial advisor in the first place is that they don’t have the bandwidth to build a comprehensive financial plan. Within their busy lives, they don’t have the time to review tax codes or run different financial models to plan out their financial future. Why, then, would things be any different regarding your investment strategy?
Some investors think that if an advisor isn’t trading stocks frequently, their investment approach is very simple and thus can be handled on their own. This fails to consider that there are still many behind-the-scenes weekly tasks to manage the portfolio’s risk profile and create tax efficiencies, namely rebalancing and tax loss harvesting.
Advisors can rebalance your portfolio and perform tax loss harvesting on your behalf, both of which are time-sensitive events requiring understanding and expertise. If executed incorrectly or at the wrong time, you will miss out on financially beneficial opportunities, your portfolio could be incorrectly allocated, or you could face costly tax repercussions. If you are already working with an advisor to manage your financial planning, then you can further delegate your investments. It’s almost as if your personal trainer is doing the push-ups for you!
How often are you reviewing your portfolio? Are you dedicating hours of your week to it? When life gets hectic, are you still able to devote that same level of attention, or does monitoring your investments start to take a backseat?
Another considerable benefit of having an advisor manage your portfolio is the increased time and attention in assessing market conditions and performing due diligence on investment products. No one knows what the market will do next. But a sophisticated financial advisor will constantly assess if there have been significant changes to the investment landscape that can disrupt your portfolio from achieving its goal. For instance, in the last few years, a tilt in a portfolio’s bond allocation to protect it against a rising interest rate environment would have lasting effects on protecting your wealth.
Your finances are an emotionally charged topic. Most investors understand the logic of “buy low, sell high” and why spending time in the market is important rather than trying to time the market. Still, it’s much more difficult to adhere to this logic in the face of market & economic turbulence.
One of the most critical benefits of having an advisor manage your investments is that they don’t have the personal emotional baggage attached to your investments and thus can be more level-headed when there are large swings in the market or a lot of hype around trendy new investments. It is an understandable urge to shift your investments to a less risky vehicle when the market takes a hit or to jump on the bandwagon of very hot stock. These behavioral impulses are understandable but can also result in serious taxable events and weighty losses.
An experienced financial advisor will have an even-tempered view of whether external events merit a material change in your investment strategy or whether it’s merely normal volatility that occurs with being invested in the stock market. No one can predict the markets, including financial advisors, but as the old saying goes, it is important that “cooler heads prevail.”
The most common misconception about an AUM relationship versus a flat fee relationship is that an AUM is more expensive. Because of the increase in many low-cost investment platforms and Robo-advisor offerings, it’s easy to assume that it would be cheaper to manage your investments yourself and hire an advisor to do the financial planning. This isn’t necessarily true.
The vast majority of financial advisors charge on a tiered structure. As advisors manage more of your portfolio, the overall percentage fee that they charge decreases. As advisors begin to manage more assets, different breakpoints take effect, so a 100% increase in money management does not result in a 100% increase in fees.
Additionally, we’ve seen clients paying more for a flat fee engagement than they would have if they had engaged in an AUM relationship. For example, we often see clients paying around $5k due to the complexity of their financial picture when if they had moved over their $300k assets, they would have paid only $3k per year. Not only would they pay less, but they would have gotten a broader service as the advisor would have been doing the investment management, rebalancing, and tax harvesting. When you combine these considerations, pursuing a flat fee relationship where you must manage your own investments is not necessarily a cheaper option than an AUM relationship.
While AUM relationships have been the primary relationship type throughout the history of the wealth management space, the flat fee model is a relatively newer structure. As with most well-established services, AUM fee models have developed a fairly common market price. It is common in the world of independent financial advisors to see a fee of 1% for asset management, with a range of 0.6% to 1.2% derived by the size of the managed portfolio and the inclusion of any additional services. On average, 1% is the market price for an AUM relationship.
Flat fee relationships, however, do not currently have a well-established market price. There is a push in the industry to develop some uniformity, but there is still great variability. When holding constant the advisor’s experience and the complexity of services offered, you can still see variability in cost between advisors that can be thousands of dollars in difference. This inconsistency can make it difficult to be certain that you are getting charged a fair and reasonable price for your service.
Providing clients with different options to pay for a service is a net positive development for the industry to become more client-centric. Flat-fee relationships make a lot of sense in many instances. Young high-earning individuals who don’t have much wealth yet and likely have student debt can greatly benefit from a flat-fee relationship. Real estate investors who have most of their wealth in illiquid properties rather than equities can still reap major benefits from flat-fee. People with a one-off complex question are better off hiring an advisor who charges them per hour.
With benefits such as consistent goal monitoring, aligned incentives, and truer market prices, people who primarily have their wealth in traditional investment vehicles will reap the most benefit from working with an advisor in an assets under-management relationship.
Disclosures: Zoe Financial, Inc. ("Zoe Financial") is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Zoe Financial provides investment advisory services and access to independent registered investment advisers through its platform. The information provided by Zoe Financial is for educational and informational purposes only and should not be construed as personalized investment advice or as an offer to buy or sell any security. All investments involve risk, including possible loss of principal. Past performance is not indicative of future results. Clients should consult with their own financial, tax, or legal professionals before making any investment decisions. The material presented by Zoe Financial is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Material presented has been gathered from sources believed to be reliable, however Adviser cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Past performance is no guarantee of future results. Zoe Financial does not provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice. SEC Registration does not constitute an endorsement of Zoe Financial by the SEC nor does it indicate that Zoe Financial has attained a particular level of skill or ability. The sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be appropriate for all clients. Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Lower expenses do not guarantee better investment performance. Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, actual events, results or the performance of a fund may differ materially from those reflected or contemplated in such forward-looking statements.
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2026 Zoe Financial, Inc. | All rights reserved
Find an Advisor
Retirement Planning
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2026 Zoe Financial, Inc. | All rights reserved
Find an Advisor
Retirement Planning
Disclosure: This page is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.
Investment advisory services are provided by Zoe Financial, Inc. (Zoe Financial), an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. Learn more about Zoe Financial on the SEC’s Investment Adviser Public Disclosure website. Brokerage services are provided by Zoe Securities LLC and Apex Clearing Corporation, members of the Financial Industry Regulatory Authority Inc. (FINRA) and Securities Investor Protection Corporation (SIPC). Learn more about Zoe Securities and Apex on FINRA’s BrokerCheck website.
The information in the visuals above is for illustrative purposes only and does not represent an actual user's account, balance, or return. Zoe Financial does not provide tax or legal advice.
Explore the Zoe Wealth Platform with AI
Some of this content may have been generated with the assistance of AI. Please review and sense-check all outputs, as AI tools can occasionally produce incomplete or inaccurate information.
In certain situations, you may be required to disclose that the content was “generated by AI.” Please confirm any specific disclosure or labelling requirements with Compliance.
(646) 680-9244
support@zoefin.com
666 Third Ave, 6th Floor
New York, NY, 10017
Copyright © 2025 Zoe Financial, Inc. | All rights reserved
