Top 10 Questions About Flat Fee Financial Advisors

Flat fee financial advisors have existed for years, but they are rapidly gaining popularity among investors looking for a transparent and predictable alternative to traditional percentage-based fees.

Payments for financial advice have evolved dramatically over the years. For decades, most financial advisors earned their living through commissions on the products they sold. Then, as consumers demanded greater transparency, the industry shifted toward fees based on a percentage of assets under management (AUM). This approach reduced some of the conflicts of interest inherent in commission-based selling, but it also led to significantly higher costs for investors who had been diligent savers—without any clear correlation between their larger account balances and the level of service they received in return. You may be reading this because you’ve also heard about the movement to flat fees and are wondering if this is a move you should consider.

To help you determine if a flat fee financial advisor is the right fit, here are answers to the 10 most frequently asked questions.

1) What Exactly Is a Flat Fee Financial Advisor?

A flat fee financial advisor charges a fixed rate for their services, regardless of your total assets or specific products you purchase. Unlike percentage-based advisors—who typically collect a fee based on a percentage of the assets they manage for you—or commission-based advisors—who earn money by selling investment or insurance products—a flat fee advisor’s compensation does not fluctuate with the size of your account or the number of trades made.

2) What Services Are Included in a Flat Fee Arrangement?

Services vary by advisor, but most flat fee advisors offer comprehensive planning, investment guidance, and ongoing support—similar to what you’d expect from an AUM-based or commission-based advisor. Some advisors offer a grid with a basic, intermediate, advanced, arrangement which are all different fees. At Carroll Advisory Group, we have one fee that covers everything from investment management, planning, ongoing support, the full client service calendar and unlimited access to the team. 

3) How Can a Flat Fee Financial Advisor Save Me Money Over Other Fee Structures?

One of the most notable advantages of working with a flat fee financial advisor is the potential for significant long-term cost savings compared to the traditional assets under management (AUM) fee model. A simple example from my free Advisory Fee Comparison Calculator illustrates this:

Let’s assume:

• $3 million portfolio
• 7% annual return
• $80,000 annual withdrawal (adjusted for inflation)
• Comparing a 1% AUM fee vs. a flat fee of $10,610 (our 2025 fee, increasing 3% per year)

The results:

• Over 25 years, an investor paying a 1% AUM fee would spend $836,544 more in fees than under the flat fee model.
• Because those higher AUM fees would have otherwise remained invested and grown, the final portfolio balance would be $1,766,041 higher under the flat fee structure.

Want to see how much you could save? Try our free Advisory Fee Comparison Calculator to compare your costs. 

4) Are Flat Fee Financial Advisors Truly Objective, or Are There Hidden Conflicts of Interest?

First, let’s be clear—conflicts of interest exist in any professional relationship. If an advisor ever claims to be completely conflict-free, that’s a red flag. However, the flat fee model is specifically designed to reduce some of the most common conflicts found in traditional financial advisory arrangements, particularly those tied to commissions or percentage-based fees on assets under management (AUM).

Because a flat fee financial advisor charges a set amount regardless of the assets you invest with them, their revenue is not directly impacted by whether you move more money into—or withdraw money from—your investment portfolio. This helps promote a more objective, client-first approach rather than an incentive to grow assets under management at all costs.

That said, no advisory model is completely free of conflicts. Since our compensation comes solely from client fees, there is an inherent conflict in the fact that we benefit financially when you choose to become a client. This reality could influence an advisor’s motivation to recommend their services. The key is transparency—acknowledging potential conflicts and ensuring that our advice is always guided by your best interests, not financial incentives.

5) Who Benefits the Most from Hiring a Flat Fee Financial Advisor?

Many investors can benefit from working with a flat fee financial advisor, but the two most common types we see are:

Those with Higher Asset Levels
Investors who have accumulated significant wealth often end up paying sizeable fees under an assets-under-management (AUM) model. For example, if you have $3 million dollars saved and your advisor cuts you a “deal” to manage your assets for .75%, that would be $22,500 per year. A typical annual flat fee might be $10,000–$12,000 for the same, or maybe even better, service. Ultimately, a flat rate ensures you pay for the advisor’s expertise without being penalized for being a good saver. 

Those Who Value a Logical Billing Structure
If you prefer straightforward budgeting and predictable costs, a flat fee financial advisor may be. With a fixed fee, it’s easier to know exactly what you’re paying and to see the direct connection between fees and services provided.

6) Who should NOT hire a flat fee financial advisor?  

While flat fee financial advisors offer transparency and cost predictability, they are not the best fit for everyone. Here are two groups of investors who may be better suited to other fee structures:

Investors with Small Portfolios
For those with smaller asset levels, a flat fee can represent a significant portion of their portfolio, making it cost-prohibitive. Unlike an AUM model, where fees scale with asset size, a flat fee remains fixed—meaning a $10,000 annual fee might be just 1% of a $1 million portfolio but a hefty 10% of a $100,000 portfolio. This can hinder portfolio growth and make professional advice less cost-effective.

A more suitable alternative for smaller investors may be:

• AUM-based advisors, where fees remain proportional to portfolio size.
• Hybrid pricing models, like our approach of charging the lesser of 1% AUM or the flat fee, ensure fees remain reasonable as assets grow.

Investors Who Don’t Need Ongoing Advice
Some investors don’t require continuous financial planning or portfolio management, making a recurring flat fee unnecessary. Paying an ongoing fee may not be cost-effective if you only need financial guidance occasionally—such as a one-time financial plan or sporadic investment check-ins.

Better alternatives may include:

• Hourly financial advisors, where you pay only for the advice you need.
• One-time planning engagements, which provide strategic direction without long-term costs.

7) Since a Flat Fee Financial Advisor’s Fees Aren’t Tied to My Investments, What Incentive Do They Have to Grow My Portfolio?

Some investors worry that because a flat fee advisor’s compensation isn’t tied to portfolio performance, they have less motivation to grow investments. However, a fiduciary advisor is ethically and legally bound to act in your best interests—regardless of the compensation model.

There is a common perception that a percentage-based (AUM) fee model better aligns an advisor’s incentives with a client’s financial success—captured in the clever marking phrase, "When you do better, we do better." This suggests that advisors who charge a percentage of assets are more motivated to grow your investments because their fees increase as your assets grow.

However, this misconception overlooks a key fact: Investment growth is primarily driven by market forces—not an advisor’s efforts. Investment returns have no secret sauce, and advisors can’t control market returns. Paying more for an advisor simply because markets perform well doesn’t necessarily mean they provide more value.

8) Are Flat Fee Financial Advisors Regulated Differently?

Generally speaking, flat fee financial advisors fall under the same regulatory frameworks as other types of financial advisors. This means they must adhere to guidelines set by the Securities and Exchange Commission (SEC) or other regulatory agencies, just like percentage-based or commission-based advisors. The main distinction lies in how they charge for their services: rather than collecting commissions or a percentage of assets under management, they charge a set fee—often on an annual, monthly, or per-project basis. Despite these different billing structures, they are still subject to fiduciary standards (if they are Registered Investment Advisers), ethical codes and compliance requirements designed to protect consumers.

9) How Does A Flat Fee Financial Advisor Collect Their Fees? 

Flat fee financial advisors typically collect fees through custodian-based withdrawals, just like AUM-based advisors..

At set intervals—typically monthly or quarterly—the advisor submits a fee request to the custodian (e.g., Schwab, Fidelity, or Vanguard). The custodian then automatically deducts the fee from the client’s investment account and transfers it to the advisor.

This process ensures a seamless and secure payment method, with all transactions documented on the client’s account statements for full transparency.

10) What Should I Look for When Selecting a Flat Fee Financial Advisor?

If a financial advisor offers services on a true flat fee basis, you can likely skip some of the usual warnings, such as "make sure they’re a fiduciary." Why? Because an advisor working exclusively for a flat fee isn’t earning commissions from product sales, nor are they charging a percentage of your assets, reducing common conflicts of interest. That said, not all flat fee financial advisors are created equal, so here are a few key factors to consider when selecting the right one for you:

Work with a CFP® Professional

While no designation is a silver bullet, a CERTIFIED FINANCIAL PLANNER™ (CFP®) professional has completed rigorous coursework, passed a difficult exam, and adheres to ethical and fiduciary standards. This ensures they have a strong foundation in investments, tax planning, estate planning, and retirement strategies—all critical areas of comprehensive financial planning.

Look for Clear Fee Disclosure and a Transparent Increase Schedule

One of the biggest benefits of a flat fee financial advisor is knowing exactly what you’re paying—but it’s equally important to understand how that fee may increase over time. Unlike percentage-based fees, which naturally rise as your portfolio grows, flat fees should follow a predictable adjustment schedule to keep up with inflation and business costs.

• Ask how often the advisor raises fees and by how much.
• Look for advisors who disclose this clearly upfront rather than implementing large, unexpected increases on an ad-hoc basis.

Ensure They Have a Defined Client Service Schedule

A well-structured client service process is a sign of a professional, organized advisor who prioritizes long-term relationships. Ask questions like:

• When do we meet? (e.g., quarterly, semi-annually, annually)
• How often are financial plans updated?
• What happens if I have a major life event or financial question?

An advisor who has clear, well-defined processes demonstrates that they have invested time and effort into building a great client experience, rather than working reactively.

Selecting a flat fee financial advisor who is a good fit for you is about more than just the pricing structure—it’s about finding an advisor who is qualified, transparent, and service-oriented. If you'd like to explore our services, be sure to visit our How We Help page.