RIA Pricing Strategy: AUM Fees, Flat Retainers, and Hourly Rates for Independent Advisors
Pricing is one of the most consequential and most avoided decisions for breakaway advisors. Many advisors simply replicate their former firm's fee schedule without evaluating whether it optimally serves their target clients, reflects the value they deliver, or positions them competitively in their niche. Getting pricing right from day one maximizes revenue per client, attracts the right clients, and reduces fee objections — because clients who understand and accept your pricing philosophy from the first meeting rarely challenge it later. This guide covers every major RIA fee model with current market rate data and guidance on when each model is optimal.
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The Quick Answer
The AUM-based fee model — 1% on the first $1M, 0.75% on $1M–$3M, 0.50% on $3M+ — remains the dominant pricing model for RIAs managing portfolios for clients with $300,000 or more in investable assets. The flat annual retainer model ($3,000–$10,000/year per household) is optimal for clients with high income but lower investable assets — millennials, small business owners, and professionals whose wealth is in equity compensation or real estate rather than liquid investments. The advice-only hourly model ($250–$400/hour) serves DIY investors who want objective guidance without portfolio management. Most independent RIAs in 2026 use a hybrid: AUM fees for investment management clients, with a separate planning retainer ($1,500–$3,000/year) for clients who want comprehensive financial planning beyond portfolio management.
AUM Fee Schedule: Standard Rates and Breakpoint Design
The AUM fee schedule is the most transparent and client-comprehensible pricing model for investment management services. Standard market rates in 2026, based on industry surveys and NAPFA fee data: 1.00%–1.25% on the first $500K, 0.85%–1.00% on $500K–$1M, 0.75%–0.85% on $1M–$3M, 0.50%–0.65% on $3M–$5M, 0.35%–0.50% on $5M+. These rates are charged on total household AUM at the billing frequency specified in your advisory agreement (quarterly is standard). Your Form ADV Part 2 must include your full fee schedule in plain English. Breakpoint design matters: a schedule that drops to 0.75% at $1M encourages clients to consolidate more assets with you (to maximize cost savings), while a flat 1% schedule leaves money on the table with larger clients. Advisors targeting clients in the $300K–$1M range often charge a flat 1.00%–1.25% with no breakpoints, since the AUM amounts involved don't create significant enough dollar-fee differences to warrant administrative complexity. Build your fee schedule in Orion or Altruist's billing module from day one — these platforms calculate fees automatically based on your schedule and account values at each billing period.
Flat Annual Retainer: Pricing for Comprehensive Financial Planning
The flat annual retainer model has grown rapidly among independent RIAs, particularly those serving younger, income-rich but asset-light clients. XYPN (XY Planning Network) has been the primary advocate for subscription and retainer pricing in the independent channel, and their member survey data provides useful market benchmarks. Current retainer rate ranges: $3,000–$5,000/year for young professionals with income above $100,000 and early-stage wealth accumulation needs (student loan management, first home, equity compensation, Roth conversion); $5,000–$8,000/year for mid-career professionals with more complex planning needs (business ownership, concentrated stock positions, aging parents); $8,000–$15,000/year for comprehensive planning for higher-income clients with estate planning, business succession, and tax complexity. Initial planning fees (one-time engagement fee covering the initial financial plan development) typically run $1,500–$5,000 in addition to the annual retainer, reflecting the upfront labor of data gathering and plan construction. Retainer pricing should be presented as an annual total with a clear description of what's included — comprehensive financial plan, quarterly check-ins, tax planning review, and access for ad hoc questions — so clients understand the value they're receiving for the fee.
Advice-Only Hourly Pricing: Serving the DIY Investor Market
Advice-only financial planning — charging by the hour for financial planning guidance without taking custody of assets or managing portfolios — is a growing niche within the independent RIA space. The NAPFA membership directory includes a growing cohort of advice-only planners who serve clients who want objective, fee-only guidance without an ongoing management relationship. Current market rates for advice-only planning: $250–$350/hour for advisors with 3–7 years of experience and a CFP designation; $350–$500/hour for senior advisors with specialized expertise (tax planning, estate planning, Social Security optimization). Some advice-only advisors offer project-based pricing: a comprehensive financial plan for $2,500–$5,000, a retirement income plan for $1,500–$3,000, or a Social Security analysis for $500–$1,000. The NAPFA Garrett Planning Network was historically the main referral source for advice-only clients; today the Advice-Only Network (adviceonlynetwork.com) and XYPN's directory also connect clients with hourly planners. The advice-only model requires more active client acquisition than AUM-based models because there is no recurring revenue — each client is a new engagement or a periodic returning client, not a recurring AUM fee stream.
Hybrid Pricing: Combining AUM and Planning Fees
Many independent RIAs in 2026 use a hybrid pricing structure that separates investment management fees from financial planning fees, allowing them to charge appropriately for both services rather than attempting to justify an all-in AUM fee that implicitly covers both. A common hybrid structure: AUM fee of 0.75%–1.00% for investment management (portfolio construction, monitoring, rebalancing, quarterly reporting), plus a flat annual planning retainer of $1,500–$3,000 for comprehensive financial planning services (retirement projections, tax planning, estate coordination, insurance review, Social Security analysis). This structure has two advantages: (1) It explicitly demonstrates the value of financial planning separate from portfolio management, reducing the perception that the advisor is simply a portfolio manager; (2) It creates a planning fee that is billable to non-AUM clients (e.g., clients whose assets are primarily in employer 401(k)s that you cannot manage directly). The ADV Part 2 must clearly describe both fee components and how they interact — for example, 'AUM fees are calculated on the market value of assets under our management and do not cover financial planning services, which are billed separately.'
Fee Transparency, Comparison Disclosure, and Client Fee Conversations
Fee transparency is both a regulatory requirement and a competitive advantage for fee-only RIAs. Your Form ADV Part 2 must include your full fee schedule and a description of how fees compare to alternatives (robo-advisors, broker-dealers). In client conversations, proactively addressing the fee comparison to wirehouses and robo-advisors demonstrates confidence and reduces objection risk. A wirehouse advisor charging 1% is typically also generating 0.25%–0.50% in fund expense ratios through proprietary products — total client cost of 1.25%–1.50%. A fee-only RIA charging 1% using low-cost ETFs (0.03%–0.10% expense ratios) delivers lower total investment cost while providing fiduciary-grade advice. Robo-advisors charge 0.25%–0.40% but provide no personalized financial planning — the advisor's planning value must justify the additional 0.60%–0.75% in fees through demonstrably better client outcomes (retirement date, tax savings, insurance coverage, estate plan completeness). Practice delivering this comparison naturally in your first client meeting before the fee conversation arises — advisors who proactively address total cost comparison are consistently rated more trustworthy by prospective clients.
Billing Automation: Orion, Altruist, and Custodian Fee Tools
Manual fee calculation and invoicing is a time-consuming and error-prone process that scales poorly as your client base grows. Automate billing from the first client. Orion Advisor's billing module calculates AUM fees automatically based on your fee schedule and account values at each billing date, generates client-facing fee invoices, and submits fee deduction instructions to your custodian's billing interface. Orion supports tiered fee schedules, household billing (aggregating multiple accounts for breakpoint purposes), minimum fee thresholds, and prorated fees for accounts opened mid-quarter. Altruist's integrated billing provides similar functionality for advisors using Altruist as their custodian — AUM fee calculation, deduction submission, and billing statement generation are all built into the platform at no additional cost. For practices using Schwab or Fidelity without a standalone portfolio management platform, both custodians provide basic fee billing tools in their advisor portals that handle simple AUM fee schedules. The most important billing automation best practices: always send clients a billing notice (via email or portal notification) before deducting fees, maintain documentation of each billing calculation for compliance examination purposes, and reconcile billing records against custodian statements quarterly.
RECOMMENDED TOOLS
Orion Advisor
Portfolio management platform with automated AUM fee billing, tiered fee schedule support, household billing, and direct custodian fee deduction integration.
NAPFA
National Association of Personal Financial Advisors — the standard-setting body for fee-only financial planning with a consumer referral directory and fiduciary pledge.
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FREQUENTLY ASKED QUESTIONS
What is the average RIA fee for a $500,000 portfolio?
The industry median AUM fee for a $500,000 portfolio at an independent RIA is approximately 1.00%–1.15%, or $5,000–$5,750 per year. Robo-advisors charge 0.25%–0.40% for the same AUM level but provide no financial planning. Wirehouses typically charge 1.00%–1.50% all-in (including proprietary fund expenses). Fee-only RIAs charging 1.00% with low-cost ETF portfolios provide comparable or lower total investment cost to wirehouses while providing fiduciary-grade planning services — an increasingly compelling value proposition in advisor fee transparency conversations.
Should I charge an initial planning fee in addition to annual retainer fees?
Yes — most experienced financial planning RIAs charge an initial planning engagement fee of $1,500–$5,000 to cover the substantial upfront labor of client data gathering, financial plan construction, and initial recommendation delivery. This fee is separate from the ongoing annual retainer and is disclosed in your ADV Part 2. The initial fee signals that your planning work has stand-alone value, filters out price-sensitive prospects who won't appreciate comprehensive planning, and compensates you for work that takes 10–20 hours before any ongoing relationship revenue begins.
How do I calculate AUM fees for clients with accounts at multiple custodians?
If you manage assets for a client across multiple custodians (e.g., Schwab for taxable accounts and Fidelity for an inherited IRA), you should aggregate all household AUM for fee schedule breakpoint purposes and bill the appropriate blended rate on total household assets. Your billing platform (Orion or Altruist) handles this household aggregation automatically when configured correctly. You must deduct fees from accounts at each custodian proportionally or from a single designated billing account — your advisory agreement should specify which method you use. Disclose the multi-custodian fee methodology clearly in your ADV Part 2.
Can I charge both an AUM fee and a planning retainer to the same client?
Yes — this hybrid pricing is increasingly common and fully permissible for RIAs, provided both fees are clearly disclosed in your Form ADV Part 2 and investment advisory agreement. The key requirement is transparency: clients must understand they are paying both an asset management fee and a separate planning fee, what each covers, and how the total cost compares to alternatives. Many RIAs use the hybrid structure to ensure planning services are valued and billed appropriately rather than being bundled implicitly into an AUM fee that clients don't associate with planning work.