Most advisors set their fee schedule once, at the very beginning, by copying whatever their previous firm charged and rounding it. Then they never touch it again. Ten years later it’s still there, quietly deciding which clients are profitable and which ones you’re subsidizing.
This isn’t an argument that you’re charging too little, or too much. It’s that the number was inherited rather than chosen, and a schedule nobody has revisited in a decade is unlikely to fit the firm you actually run now.
Where 1% came from
It came from an era with higher trading costs, no free rebalancing software, and a much narrower service offering. It survived because it’s easy to explain, easy to compare, and scales automatically with markets, which is pleasant when they go up.
The pressure on it is real, but it’s worth being precise about where the pressure comes from. It isn’t that clients think 1% is too much. It’s that they increasingly ask what the 1% covers, and a firm that answers with portfolio management alone is in a much weaker position than a firm that answers with planning, tax coordination, estate work, and a service calendar. The number isn’t the problem. The absence of an answer is.
The four structures, and who each one actually fits
Percentage of assets works when the client has assets, when your work scales with portfolio complexity, and when you’re comfortable with revenue that moves with the market in both directions. It’s still the default for good reasons.
Flat annual fees work when your value is planning rather than portfolio size, and when you keep taking on clients whose complexity has nothing to do with their balance. They also make revenue predictable, which matters more than most owners expect until the first bad year.
Subscription and monthly retainers work for clients with income and no accumulated assets: younger professionals, business owners mid-build. They’re also the structure most likely to be underpriced, because the monthly number feels small while the annual work doesn’t.
Hourly works for one-off engagements and almost nothing else. It caps your income at your available hours, it punishes efficiency, and it makes clients hesitate before calling you, which is the opposite of what you want.
Plenty of firms run two of these side by side. That’s fine as long as it’s deliberate, and not the residue of saying yes to whatever each client proposed.
Breakpoints, and the arithmetic nobody checks
A tiered schedule should reflect that a ten million dollar relationship doesn’t take ten times the work of a one million dollar relationship. Most do. The part that goes wrong is the arithmetic at the boundary: check that a client just above a breakpoint doesn’t pay less in absolute dollars than a client just below it. Marginal tiers avoid this. Cliff tiers don’t, and it happens more often than you’d think.
Minimum fees do more work than a higher rate
A minimum annual fee is the quietest fix available for the unprofitable end of the book. It doesn’t require raising anyone’s rate and it doesn’t require a difficult conversation with your best clients. It just sets a floor under what it costs to be a client, which is the actual issue with small accounts. The cost of serving a client has very little to do with their balance, and a percentage-only schedule pretends otherwise.
Raising fees on legacy clients
This is the one everyone avoids. The client who came in at the beginning, at a rate you’d never quote today, who has been loyal for fifteen years. Two things are true at once: they’re genuinely valuable, and they’re currently being paid for by everyone else.
What works isn’t a letter announcing a rate change. It’s a conversation that starts with what the relationship includes now compared to what it included then, because in most cases the service has expanded substantially and the fee hasn’t. Give real notice, apply it to the next agreement cycle, and expect to lose a few. Firms that do this carefully usually lose fewer than they feared and find the ones who left were the least engaged.
Discounting is a habit, not a decision
Almost nobody discounts on purpose. It happens one prospect at a time, in the moment, to get a yes. The problem is it never shows up as a line item anywhere, so it never gets reviewed. Add up the difference between your schedule and what your clients actually pay. For most firms with any history, that gap is a meaningful share of revenue, and it sits right alongside the expense side we covered in our practice overhead checklist. Fee leakage and overspending are the same problem approached from opposite ends.
Your fee schedule is a positioning statement
Clients read it, whether or not you intended it that way. A schedule with a real minimum and a clear tier structure says the firm knows who it serves. A schedule that bends for everyone says the opposite, and it’s visible.
The practical ask is small: pull your actual realized rate per client, compare it to your published schedule, and see how far apart they are. That comparison is more useful than any benchmark study, and it pairs naturally with the growth numbers worth watching monthly. You may conclude the schedule is right. At least it will be a decision this time.
Pricing is one piece of running the firm. We cover staffing, growth, and the rest of the operating side on our practice management page.
Ritz Stevens members get a straight read on their fee schedule: what the realized rate actually is, where the leakage sits, and what a change would do to revenue before anyone sends a letter.
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