If you have spent any time researching wealth management firms, you have likely run into a frustrating paradox. Traditional Wall Street firms have mastered the art of cloaking their fees in obfuscation. They talk extensively about client service, bespoke strategies, and holistic planning, but getting a straight answer about exactly how much you will be paying each year can feel like pulling teeth.
For decades, the Assets Under Management (AUM) model has been the industry default. You hand over your capital, and your advisor subtracts a percentage (usually starting around 1.0%) each year.
But as your net worth scales to $5 million, $10 million, and beyond, a critical question must be asked: Does it really require 10 times more work to manage a $10 million portfolio than a $1 million portfolio?
The honest answer is no. This reality is why sophisticated investors are increasingly abandoning the AUM model in favor of a transparent flat fee structure.
To bring transparency to this decision, we evaluated standard industry benchmarks alongside public regulatory filings (Form ADV Part 2A) from a cross-section of prominent regional and national Registered Investment Advisors (RIAs) to show exactly how much an AUM-based fee structure costs at $5M, $10M, and $25M compared to a modern flat-fee model.
| Peer RIA | AUM ($bn) | $5m Portfolio | $10m Portfolio | $25m Portfolio |
|---|---|---|---|---|
| Peer 1 | $1.2 | $43,500 | $78,500 | $153,500 |
| Peer 2 | $1.0 | $46,000 | $86,000 | $191,000 |
| Peer 3 | $2.3 | $50,000 | $87,500 | $162,500 |
| Peer 4 | $183.9 | $46,500 | $86,500 | $191,500 |
| Peer 5 | $115.6 | $52,500 | $92,500 | $182,500 |
| Peer 6 | $77.6 | $48,000 | $85,500 | $160,500 |
| Peer 7 | $23.2 | $52,500 | $90,000 | $183,750 |
| Peer 8 | $16.2 | $42,500 | $70,000 | $137,500 |
| Peer 9 | $9.0 | $45,500 | $83,000 | $160,500 |
| Peer 10 | $18.4 | $50,500 | $80,500 | $140,500 |
| Average Fee | $47,750 | $84,000 | $166,375 | |
| Median Fee | $47,250 | $85,750 | $161,500 | |
| Birchwood Capital Fee | $24,000 | $24,000 | $24,000 | |
The $5 Million Tier
Many AUM firms boast about their “graduated fee schedules,” with the idea being if you give them more wealth to manage, your percentage fee rate goes down. Industry benchmarks and peer ADV filings show that while the marginal rate drops, the total blended dollar amounts remain staggering:
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AdvisoryHQ Data: Industry data shows that the average $5M client pays roughly $42,000 annually in fees.
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Select Peer RIAs: When analyzing data across a group of leading wealth management firms who charge AUM fees, the typical annual fee (both median and average) for a $5M portfolio is around $47,000.
The Contrast
Birchwood Capital charges a predictable, fixed annual fee based on the actual complexity of your financial situation rather than the size of your brokerage account. Whether your portfolio is $3 million or $5 million, the underlying core wealth management, tax planning, and asset allocation work is remarkably similar. By transitioning away from AUM at this tier, investors routinely save $20,000+ every single year.
The $10 Million Tier
At $10 million in investable assets, the compounded drag of an AUM fee moves from “costly” to “exorbitant.” It is the tier where the famous industry joke hits closest to home: Stop buying your advisor a brand-new luxury vehicle every single year.
Let’s look at what the industry actually charges a $10M family:
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Cerulli Associates Research: Highlights that while fee compression is happening (slowly), the average expected fee for a $10M client still hovers around 66 basis points, which implies $66,000 per year.
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AdvisoryHQ Data: Industry average annual cost is $69,000.
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Select Peer RIAs: The empirical regulatory data paints an even more expensive reality. Across our peer firm benchmark group, the average annual fee is $84,000, with a median fee of $85,750. At the upper end of the spectrum, AUM-based RIAs are charging over $92,000 per year for a portfolio of this size.
The Contrast
Think about the scope of work. Does a typical $10M client require $84,000 worth of hours and infrastructure every 12 months? Our experience says no. Birchwood Capital provides identical services (and often more) for a fraction of that cost. The savings accrue to our clients and their families, compounding for their benefit and providing them more resources to pass on to future generations or give to charity.
The $25 Million Tier
Once you cross into ultra-high-net-worth territory, the math behind the AUM model breaks down completely. At $25 million, an AUM-based fee functions less like a service fee and more like a wealth tax:
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AdvisoryHQ Data: Benchmarks show ultra-high-net-worth clients at this level paying well over $130,000 annually.
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Select Peer RIAs: Our analysis of national and regional peer firms shows that the average fee paid to a traditional provider at $25M of client assets is an astronomical $166,375 per year (with a median of $161,550).
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The Extremes: The highest-charging traditional firms in the dataset top out at over $191,000 annually. Even the absolute minimum annual fee found among the traditional peer group sits at $137,500.
Paying $160,000+ year-in and year-out for wealth management simply cannot be justified by labor hours. An advisor managing a $25 million investment portfolio is executing the same rebalancing trades and tax-loss harvesting strategies as they do for a client with $5 million.
Why the Industry Hides Behind AUM (And Why We Don’t)
Traditional firms fight desperately to keep the AUM model alive because it is incredibly lucrative for them (and often hidden from the view of their clients). Because AUM fees are directly debited from your investment accounts quarterly, you never have to consciously write a physical check for $85,000 or $166,000. It’s a classic case of “out of sight, out of mind.”
Furthermore, AUM introduces a fundamental conflict of interest. If you want to take $1 million out of your portfolio to buy real estate, pay off a mortgage, or fund a philanthropic endeavor, an AUM advisor has a direct financial incentive to tell you “no” because their personal paycheck shrinks the moment your portfolio does.
The Birchwood Capital Way
We believe high-net-worth families deserve absolute clarity. Our flat-fee pricing model decouples our compensation from your account balance.
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No hidden math.
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No commissions for product sales.
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No percentage penalties for growing your wealth.
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Objective advice on your total net worth, regardless of where your money resides.
Your wealth management should be treated like any other professional service: you pay an open, transparent, flat rate for expert execution.
If you’re ready to see exactly how much an unbundled, flat-fee structure could save your portfolio over the next decade, we’d love to start a conversation.
(Note on Methodology: RIA Peer Group firms have $1bn+ AUM and disclose AUM fee schedules up to and beyond $10m in assets. More detail is available upon request.)
