If you are reading this, you’re likely tired of paying a traditional financial advisor a 1% AUM (Assets Under Management) fee just to manage your portfolio. You might be wondering: What other options exist if I don’t want to pay 1% of my hard-earned assets for investment oversight alone?
As we have shared across multiple articles on this topic, two main fee-only advisory categories are gaining significant momentum today:
• Hourly Financial Planning
• Flat-Fee Retainer (or Membership) Services
Neither service model is new. Hourly financial planning, for example, has been around for over 20 years in the financial planning world. On the other hand, while retainer fees and memberships have existed for decades in professions like law, they are much newer in wealth management and financial planning.
Both options use a flat-fee structure, either based on the number of hours spent on your case or on an ongoing annual, quarterly, or monthly rate for continuous support rather than a one-time consultation.
Let’s address the most common questions we receive from clients here in Boca Raton, Florida, as well as nationwide:
1. How Exactly Do Hourly and Retainer Fee Models Differ in How I Pay?
If you’re looking to move away from percentage-based AUM fees, here is how flat-fee models compare:
• Hourly Financial Planning: You pay strictly for the time spent on specific projects (such as a single retirement strategy review, tax scenario check, or portfolio checkup), similar to hiring a CPA or attorney. As I like to explain it: it’s like going to your barber. You get the service you came for, you pay for that time, and the barber doesn’t charge you extra simply because your hair grew longer!
• Retainer Financial Planning: You pay a predictable flat fee charged monthly, quarterly, or annually for ongoing access, continuous portfolio oversight, and regular plan updates regardless of the exact hours used. You can think of a retainer as a natural continuation of hourly planning for investors who receive a detailed plan and want a trusted advisor to partner with them on execution.
Ongoing retainer plans bring to mind John C. Maxwell’s famous quote: “Plans are successful only to the extent that they can be executed.”
This evolution in how portfolio management, tax planning, and financial guidance are delivered opens up great new choices for retirees. However, one key suggestion I always give: no matter whether you choose hourly, retainer, or a percentage-based model, work with a Fee-Only Financial Advisor.
Remember, true Fee-Only advisors do not accept commissions, kickbacks, or third-party incentives. This structure removes major conflicts of interest when recommending financial strategies or products.
2. When Does It Make Financial Sense to Hire an Hourly Planner Instead of a Retainer Advisor?
If you generally enjoy managing your own finances, consider yourself a Do-It-Yourself (DIY) who likes learning about financial topics to apply them personally, or simply want an objective second opinion from an advisor with zero conflicts of interest, hourly financial planning makes perfect sense.
Most clients who hire us for hourly planning want exactly that: a candid, honest review without the high-pressure sales pitch for an annuity or an investment product that even the salesperson can’t explain in plain English.
Unlike what some traditional institutions try to portray, hourly financial planners often have broad experience across diverse economic scenarios because they work with clients from all walks of life. While a traditional advisor might focus almost exclusively on investment selection, an hourly planner adds significant value across tax optimization and retirement income planning.
At Advise Financial, we specialize in serving pre-retirees and retirees who want to evaluate strategies like Roth conversions, quantify potential lifetime tax savings, and leave with a clear, prioritized action plan tailored to their goals.
If you’re comfortable taking those written instructions and executing every task yourself without ongoing help, you may not need a retainer fee model. You can simply hire the advisor hourly for future check-ins.
3. What Are the Pros and Cons of an Hourly Financial Planning Agreement?
The main advantage of hiring an hourly financial planner is that you control the scope. Some clients want only a quick portfolio review. Others want to analyze whether a Roth Conversion strategy is beneficial. That broader analysis involves reviewing tax returns, investment allocations, income streams, expenses, and Medicare IRMAA surcharges to deliver a comprehensive answer.
Hourly planning gives you full control over how much you spend and how often you interact with your advisor. For instance, after building an initial plan, many clients schedule an annual review or book an on-demand session whenever life changes, without paying a monthly fee when they don’t need active support.
The main drawback? Some retirees realize they aren’t great at following through on instructions on their own. It’s like buying a gym membership and new workout clothes, but realizing you really needed a personal trainer to guide you through the routines. Even though an annual check-in session at ~$300/hour is vastly cheaper than paying $10,000+ a year in 1% AUM fees, some individuals prefer having a partner handle the heavy lifting for them continuously.
4. What Are the Pros and Cons of an Ongoing Retainer Model?
The fairest comparison here is evaluating a flat retainer fee versus paying 1% (or more) on your total portfolio balance.
The primary benefit of a flat retainer is that your advisory fee does not automatically inflate as your wealth grows. It remains a predictable dollar amount (typically adjusted only for inflation).
While inclusions vary across firms, at Advise Financial, our flat-fee retainer model includes:
• Investment Portfolio Management: Ongoing account management and systematic rebalancing so emotional market downturns don’t cloud your rational long-term strategy.
• Comprehensive Financial Planning: Regular reviews of your short-, medium-, and long-term goals, analyzing cash flows, retirement income streams, and life changes.
• Proactive Tax Planning: Year-round strategies to optimize your overall tax exposure (Note: tax planning focuses on forward-looking strategy, distinct from tax filing or formal legal tax advice).
Note: Some flat-fee planners offer financial and tax planning but leave portfolio execution entirely up to you.
Flat-fee retainer models work exceptionally well for investors with portfolios over $2 million and offer extraordinary savings for portfolios between $5 million and $7 million.
Example: On a $5 million portfolio, a standard 1% AUM fee costs you $50,000 per year, and that fee increases if your portfolio grows. If you instead pay a flat $12,000 annual retainer for full portfolio management, tax, and financial planning, that equates to just 0.24% of your portfolio value, saving you tens of thousands of dollars each year.
When is a retainer model less effective? Typically for portfolios under $1 million. If you have a $500,000 portfolio and pay an $8,000 annual flat retainer, your effective fee rate would be 1.6%, which is higher than the 1% industry average.
5. Will an Hourly Advisor or a Retainer Advisor Always Act as a Fiduciary for My Retirement Plan?
This question is crucial: Do not assume that simply because an advisor charges hourly or via retainer, they are automatically acting as a true fiduciary or operating free of conflicts of interest.
The only reliable way to ensure your wealth advisor works solely in your best interest is to confirm they are strictly Fee-Only and accept no third-party commissions or product incentives.
Ready to Find the Right Fit for Your Retirement?
If you’d like to learn more about our dedicated Hourly Financial Planning or Flat-Fee Retainer services, guided by a CFP® with nearly 30 years of experience in a true Fee-Only environment, schedule an introductory consultation today before our capacity for new clients reaches its limit
Notice: This case study and comparison are presented for illustrative and educational purposes only. Fee savings and overall financial performance depend on individual portfolio sizes, specific planning needs, and scope of engagement. Past results or specific client scenarios do not guarantee future outcomes or cost savings for other clients. Advise Financial and its investment advisory representatives do not provide legal or tax advice. We offer financial planning services and strongly encourage clients to consult with their CPA or qualified tax specialist regarding their specific tax needs.
