Subscription fee vs AUM % fee: Cost & Coverage Comparator - Tool
What the Comparator Measures (and Why It’s Useful)
The tool frames two common models side-by-side:
- AUM % fee – A percentage charged on assets an adviser directly manages. The fee applies only to those accounts.
- Subscription fee – A flat monthly/annual fee that generally covers planning, coordination, and recommendations across all accounts (including held-away 401(k)s, cash, real estate modeling, etc.).
The SEC highlights that advisers may charge asset-based or fixed fees; both are permissible with proper disclosure. The key is understanding how those fees affect the whole financial picture. So what? Comparing by net value on total assets avoids apples-to-oranges math - especially when only part of the wealth is under an AUM umbrella.
Key Takeaways
- Fees compound. Over long horizons, small percentage differences can translate into five-figure gaps in portfolio value.
- Coverage matters as much as cost. AUM fees usually apply only to managed assets; subscriptions typically cover the whole household balance sheet (planning, accounts held away). The SEC notes advisers may charge asset-based or fixed/retainer fees—know which services apply to which assets.
- Net value, not sticker price. The right metric is “edge minus cost”: expected annual benefit from advice minus total annual fees, expressed relative to total assets impacted.
What “Edge - Cost” Looks Like in the Real World
Introduce the factor: advisory edge (the annualized, conservative estimate of improvements from planning and implementation) minus total fees.
- AUM example: If expected annual edge is 0.20% on AUM assets and the fee is 0.25%, the net could be –0.05% of total assets if only a fraction of household assets are managed.
- Subscription example: If the same 0.20% edge can be applied across all assets for a flat annual subscription roughly equal to 0.07% of total assets, the net could be +0.13%.
This is why the comparator expresses both models as a percentage of total household assets - the cleanest way to judge net value.
Where Fee Drag Shows Up
Fees reduce returns every year, and that reduction compounds. The SEC’s 20-year example on $100,000 at 4% shows:
- 0.25% fee: ≈ $208,000 ending value
- 0.50% fee: ≈ $198,000 (about $10,000 less)
- 1.00% fee: ≈ $179,000 (nearly $30,000 less)
Even modest differences scale with bigger balances and longer horizons.
How to Use a Cost & Coverage Comparator
- List all accounts (managed and held-away).
- Enter actual pricing from disclosures or public pricing pages. (For reference: Betterment 0.25%; Vanguard Digital Advisor 0.20%; Schwab Intelligent Portfolios 0% advisory with program features - check details.)
- Estimate a conservative edge that can be applied to each bucket: tax planning, fund costs, cash yield, and implementation consistency.
- Compare net value as % of total assets. Favor the model with the higher net given realistic execution and your household’s complexity.
This interactive analysis tool uses user-provided assumptions to illustrate general differences between asset-based (AUM) and flat-fee advisory models. Results are hypothetical and for educational purposes only. The tool does not project future performance or imply one model is superior. Assumptions simplify fee structures and do not reflect individual circumstances, negotiated discounts, or tax effects. Actual outcomes will vary based on portfolio composition, asset growth, and service scope. Changing inputs will materially change results. This tool does not provide investment, tax, or legal advice, and references to fee structures or adviser examples are for illustration only.
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