The longstanding industry standard of a 1 percent assets under management (AUM) fee is steadily eroding, particularly among financial advisors serving high-net-worth clients. A recent study by Cerulli Associates reveals that most advisors already charge less than 1 percent for clients with $1.5 million or more in investable assets - a trend that is expected to accelerate.
According to ThinkAdvisor, Cerulli's survey found that by 2026, 83 percent of advisors anticipate charging less than 1 percent for clients with over $5 million in assets. The average fee at that level is projected to decline to 76 basis points, down from 77 basis points in 2024. For clients with more than $10 million, the average fee is expected to fall to 66 basis points by 2026. Fees for clients with $1.5 million and $750,000 in assets are also projected to dip slightly, while rates for clients with $100,000 will likely remain steady at 125 basis points.
ThinkAdvisor reports that this evolving fee structure reflects broader shifts in client expectations- particularly as younger, affluent investors accumulate wealth and enter the market. Accustomed to diverse pricing models in other industries, these clients increasingly demand similar approaches from financial advisors.
Currently, 44 percent of advisors report that advisory fees account for at least 90 percent of their revenue- a figure Cerulli predicts will climb to 54 percent by 2026. Meanwhile, the percentage of advisors combining fees with commissions is expected to plummet from 12 percent to just 2 percent over the same period.
ThinkAdvisor also notes that today's high-net-worth investors want more than just investment management. Comprehensive financial planning, estate planning, and tax management services are becoming essential to a competitive advisory offering. As a result, advisors face the dual challenge of reducing fees while expanding the scope and quality of their services.
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