Advisor Selection

AUM vs. Flat Fee vs. Hourly: Which Advisor Pricing Fits a Doctor

By the Attend Wealth team · Updated August 2026 · 8 min read

The right fee structure for a physician changes at least twice between residency and retirement. Choosing once and never revisiting it is how people overpay for a decade.

Quick answer

Residents and fellows are usually served best by hourly or project fees, because they have high complexity and almost no investable assets. New attendings often do well with a flat annual retainer, which prices on complexity rather than a portfolio that has not been built yet. Mid-career physicians with substantial portfolios should compare a flat retainer against an AUM fee in dollars, because AUM often becomes the more expensive option somewhere between one and two million dollars in managed assets.

The break-even arithmetic

A 1% AUM fee on a five hundred thousand dollar portfolio is five thousand dollars a year. On two million it is twenty thousand. On five million it is fifty thousand, though most firms scale the rate down well before that point.

A flat retainer does not move. So the comparison is simple: divide the flat fee by the AUM rate to find the portfolio size where they cross. A twelve thousand dollar retainer against a 1% AUM fee breaks even at one point two million dollars. Below that, AUM is cheaper. Above it, the retainer is.

Why AUM fits residents badly

A resident's financial life is complex out of proportion to their assets. Four hundred thousand in student loans, a PSLF decision worth potentially hundreds of thousands, a disability insurance decision that has to be made before health changes, and a Roth contribution question. Total investable assets: perhaps fifteen thousand dollars.

A 1% AUM fee on that is one hundred fifty dollars a year, which does not fund a real planning relationship. This is why many AUM firms set investable minimums residents cannot meet. It is not snobbery; the model does not work at that asset level. Hourly and project pricing does.

Why flat fees fit new attendings well

The first attending year is the highest-leverage planning year of a physician's life, and it happens when the portfolio is still near zero. Income jumps four or five times. Withholding needs to be reset, loan strategy finalized, disability coverage upgraded, a retirement plan chosen, and a housing decision made, often all within twelve months.

A flat retainer prices that correctly because it prices the work. An AUM fee prices a portfolio that does not yet exist, which means the advisor is either working at a loss or declining the client.

Where AUM earns its keep

Once a portfolio is large enough that management decisions genuinely matter, AUM alignment has real merit. Tax-loss harvesting, asset location across account types, rebalancing discipline, and withdrawal sequencing are ongoing work whose value scales with the portfolio, and the fee scales with it too.

The incentive problem does not disappear. An AUM advisor earns less if you pay down debt, buy into a practice, or make a large gift. Notice whether the advice consistently favors keeping money invested, and ask directly how they handle that conflict.

  • Ask for the fee schedule including breakpoints, in writing
  • Calculate your break-even portfolio size against a flat-fee alternative
  • Ask how the advisor is compensated when you withdraw for a practice buy-in
  • Revisit the structure every time your portfolio doubles

What insurance implementation does to the comparison

None of these three models covers insurance placement, because that is commission territory regardless. A fee-only firm on any of the three structures will refer you out. A fee-based firm can place it directly and earn the commission.

So the honest comparison is: pick the advisory fee structure that fits your stage, then separately decide how you want insurance handled. Those are two decisions, and collapsing them is how physicians end up in the wrong structure for their asset level.

Related physician planning questions

What is the best financial advisor fee structure for physicians?

It depends on career stage. Residents and fellows generally do best with hourly or project fees. New attendings are often served well by a flat annual retainer that prices complexity rather than a portfolio that has not been built. Mid-career physicians should compare a flat retainer against AUM in dollars at their actual portfolio size.

At what portfolio size does a flat fee beat a 1% AUM fee?

Divide the flat fee by the AUM rate. A twelve thousand dollar retainer against 1% breaks even at one point two million dollars in managed assets. Below that AUM costs less; above it the retainer does. Adjust for any breakpoints in the AUM schedule.

Why do fee-only firms have asset minimums?

Because a percentage-of-assets fee on a small portfolio does not fund a real planning relationship. A 1% fee on a resident's fifteen thousand dollar Roth is one hundred fifty dollars a year. Firms using AUM pricing set minimums so the model is economically viable, which is why hourly and flat-fee planners often serve residents better.

Should I change fee structures as my portfolio grows?

It is worth reviewing whenever your portfolio roughly doubles. A structure that was correct at three hundred thousand dollars may be materially more expensive at two million without any change in the work being done.

Related insights

See how this fits into a physician-focused plan.

Attend Wealth helps physicians connect planning, taxes, investing, insurance, and retirement decisions into one strategy. If you want help applying this topic to your own loans, taxes, investments, or retirement plan, schedule a complimentary conversation.

This article is for educational purposes only and is not personalized financial, tax, or legal advice. Attend Wealth is a registered investment adviser and acts as a fiduciary to its advisory clients. Attend Wealth is fee-based: in addition to advisory fees, our advisors are licensed insurance professionals and may receive commissions on insurance policies placed through carriers including Guardian, MassMutual, Ameritas, Principal, The Standard, and Lloyd's. That compensation creates a conflict of interest. We describe it, and how we address it, in our Form ADV Part 2A and Form CRS, available at adviserinfo.sec.gov or on request. Please consult a qualified professional about your specific situation.