Why Choose a Flat Fee Financial Advisor?
- Michael Hollis, CFP®
- May 28
- 5 min read
Updated: Jun 12
Quick Summary
At TapestryFP, we charge a single flat fee instead of the traditional 1% AUM (percentage of assets under management). This reduces conflicts of interest, keeps costs predictable, and aligns our pay with the services provided and the value we deliver through financial planning, investment management, and tax planning. That is what led TapestryFP, an independent RIA serving Aurora IL, Naperville IL, and Chicago-area families to a flat fee model. The fee you pay is stated in dollars, based on the complexity of your situation, and doesn't grow just because you want us to manage more of your family's assets.
How TapestryFP Decided to Use Flat Fee
The way we charge for our work is a reflection of how we think financial advice should feel: clear, with as few conflicts of interest as possible, and grounded in the value of the advice we deliver.
That is what led us to a flat fee model.
A Comparison of AUM & Flat Fee
Most financial advisors today are compensated either through commissions received by selling products (fee-based) or by charging a percentage of the assets they manage (AUM). For many clients, that structure works fine. It is familiar, widely used, and often convenient because fees are deducted directly from investment accounts. Many AUM advisors are doing great work for their clients, and some of those clients like having the fee tied to portfolio size.
But it also has its disadvantages.
One percent does not seem like much. Yet over time, especially as portfolios grow, that percentage can become a meaningful and increasing cost without a clear connection to the value being delivered. It can also create subtle conflicts when advice involves moving money in or out of managed accounts. For example, if it makes sense for you to keep a 401k with a former employer, an advisor may still prefer it be moved. Not out of bad intent, but because that is how they are paid. It’s human nature.
Flat fee is designed to better align how we are paid with the value we provide, while reducing those conflicts.
How flat fee works
At TapestryFP, we charge a single, clearly stated fee in dollars based on the level of service you choose. It is based on the complexity of your situation and the scope of the work involved. It does not fluctuate with market movements or portfolio size during the engagement. From time to time, fees may be adjusted at the end of a contract period to reflect changes in scope or inflation, but the goal is consistency and clarity.
Why don’t more advisors do this?
Many firms like the AUM model because it creates less friction and increases the stickiness of the advisor/client relationship.
Fees are spread across accounts and automatically deducted.
Unlike a direct payment from your bank account, most clients never feel the expense.
Some advisors worry that greater transparency will invite more direct questions about value and clients will potentially stop engaging the firm.
We believe a different kind of transparency is in clients' best interest.
Why a flat fee advisor?
In a flat fee model, clients know exactly what they are paying to the dollar. We encourage clients to pay the fee from their bank account because that fosters a clearer evaluation of the value you receive.
Some clients still prefer the convenience of fees being deducted from investment accounts, so we accommodate that if that's what you choose.
One advantage for us is stability; Our revenue doesn't fluctuate if the market is down, nor do we get a bonus when it's way up. Our business depends on whether clients are happy and continue to see value in the relationship.
For us, it comes down to alignment. We want to work with clients who value the simplicity and transparency of a flat fee.
More Reasons to Choose a Flat-fee Model
Account size alone doesn’t reflect financial complexity or the work required to deliver proper planning and advice.
The value of advice in every area of your financial life is emphasized, not just investment performance.
We have fewer conflicts when recommending strategies that affect the size of the portfolio we manage for you.
Clients with larger portfolios aren't indirectly subsidizing the service to clients with smaller portfolios.
High earning professionals without large portfolios can still be served when they might not fit other fee models.
Knowing the fee won’t increase, clients are more willing to consolidate assets, letting us handle the day-to-day management, reduce idle cash, and optimize tax planning.
A flat fee creates less drag on long-term performance than a percentage-based fee that increases as your portfolio grows.
Advisory fees are predictable and easier to budget.
We are not incentivized to chase returns or take unnecessary risk to increase revenue.
It reflects how we would choose to pay for advice ourselves.
Ready for flat fee financial guidance?
If you’re a client or advisor who wants to discuss this further, please contact us with your question. We’re always happy to hear your thoughts and explain what we mean in greater detail.
FAQs
What is a flat fee financial advisor?
A flat fee advisor charges a fixed dollar amount for services, unlike AUM which bases the fee on a percentage of your investable assets that they manage.
Why choose flat fee over AUM?
Flat fees reduce conflicts, provide cost predictability, and focus on value rather than asset size. They don't grow as your portfolio grows, so "You do better when you do better".
How much does TapestryFP charge for flat fee financial advice?
Fees are based on complexity (number of portfolio holdings, tax situation, estate planning needs) and scope (ongoing implementation, investment management, tax preparation). See our Fees & Services page for more information.
Is TapestryFP a fiduciary?
As a Registered Investment Advisor (RIA), TapestryFP and all of its Investment Advisor Representatives (IAR) are legally required to put client interests before their own or the interests of the firm. Not only that, but all of our advisors that are CERTIFIED FINANCIAL PLANNER® professionals are held to an even higher Code of Ethics and Standard of Conduct. We always act in your best interests, not only because we have to but because we believe it's right.
Who is a good fit for flat fee-only financial planning?
Families, couples, solopreneurs, career changers, and pre-retirees in the Aurora IL, Naperville IL, and the Chicagoland area who have decided they don't want to pay an ever-growing fee for financial advice that is tied to the assets that their financial advisor manages.
Can I still have fees deducted from accounts?
On a monthly basis, fees will be deducted directly from your investment accounts under our management at Charles Schwab or from your bank account via ACH. There are potential tax advantages with deducting the fee from the investment accounts we manage. This is how most investment firms work.
However, we generally favor deducting our fee from your bank account rather than your portfolio for two reasons:
It keeps more of your wealth compounding in your accounts over time. Advisor fees can be a drag on your returns.
Our fee is just another annual or periodic expense. This keeps our fee front and center so you always know what you're paying and whether you are still receiving the value.
The source of paying the fees is your decision.
