Think everyone pays the same for investments? Think again.

If you think everyone pays the same fees for investment management, think again. The cost of managing your wealth can vary dramatically depending on the type of advisor, the services provided, and the investment strategies used. And these fees? They matter—a lot. Even small differences can add up to tens or even hundreds of thousands of dollars over time.

Let’s break it down.

The wide range of wealth management fees

Not all investors pay the same price for wealth management. Some people pay as little as 0.25% per year, while others shell out upwards of 2% or more. On a $1 million portfolio, that difference can mean paying $2,500 vs. $20,000 per year.

Here are the most common fee structures you’ll come across:

• Assets Under Management (AUM) Fees: Most traditional financial advisors charge a percentage of the assets they manage. The industry average is around 1% per year, but this can range from 0.50% to 2.00%, depending on the advisor and the size of your portfolio. The more assets you have, the lower your percentage may be.

  
  

• Flat Fees: Some advisors charge a fixed annual fee for financial planning and investment management. This can range from $2,000 to $10,000+ per year, depending on the complexity of your situation.

  
  

• Hourly Rates: Some advisors charge by the hour, typically between $150 and $500 per hour, for financial planning services. This can be cost-effective for investors who just need occasional advice.

  
  

• Robo-Advisors: Automated investment platforms, like Betterment or Wealthfront, charge lower fees—typically 0.25% to 0.50% per year—since they use algorithms instead of human advisors.

What drives fee differences?

So why do some people pay more than others? Several factors come into play:

1. The type of advisor you choose

Traditional human advisors tend to charge more than robo-advisors. However, a human advisor may provide additional services like tax planning, estate planning, and financial coaching that a robo-advisor won’t.

2. The complexity of your portfolio

If you have multiple accounts, alternative investments (such as private equity or hedge funds), or need advanced tax strategies, expect to pay higher fees.

3. Active vs. passive management

Advisors who try to "beat the market" with active investing strategies tend to charge higher fees, sometimes up to 2% per year or more. Passive investing, which focuses on low-cost index funds, generally costs much less.

4. The size of your investment portfolio

Many advisors use a sliding fee scale. For example:

If you have $5 million+, you might negotiate even lower fees.

Why do fees matter so much?

Fees may seem small, but over time, they take a big bite out of your returns. Let’s say you invest $500,000 and earn 6% per year before fees.

• If you pay 0.50% in fees, after 30 years, your investment grows to $2.6 million.

  
  

• If you pay 1.50% in fees, after 30 years, your investment grows to only $2.0 million.

That 1% difference costs you over $600,000.

How to reduce your investment fees

1. Compare advisor costs – Make sure you understand exactly how much you’re paying and what you’re getting in return.

   
   

2. Consider a robo-advisor – If you don’t need personalized advice, a robo-advisor could cut your fees significantly.

   
   

3. Ask for a fee breakdown – Many investors don’t realize they’re paying hidden fund expenses or transaction fees. Always ask for a full fee disclosure.

   
   

4. Negotiate – If you have a large portfolio, you might be able to negotiate lower fees with your advisor.

   
   

5. Use lower-cost funds – Index funds and ETFs generally have expense ratios under 0.10%, compared to 1%+ for many actively managed funds.

How Truthifi can help you improve your fees

Want to see exactly what you're paying and how it compares to industry standards? Truthifi makes it easy to uncover hidden investment fees, compare your costs to other investors, and find ways to reduce what you pay.

Here’s how Truthifi helps you take control of your investments:

✔ See all your investment fees in one place – Get a clear breakdown of how much you’re paying across different accounts and advisors.

✔ Compare your fees to benchmarks – Are you overpaying? Truthifi helps you compare your fees to industry averages.

✔ Get help communicating – Receive personalized suggestions on how to communicate any concerns you might have

The bottom line? Every dollar saved in fees is a dollar that stays invested and grows for your future. Ready to see what you're really paying? Check out Truthifi and start making smarter investment decisions today!