Is Your $14K-a-Year Advisor Fee a Ripoff? A Simple Math Check

Let's start with the numbers. A $14,000 annual fee on a $2.3 million portfolio works out to a fee rate of about 0.61%. That's the first thing to note: on a pure percentage basis, this is a low fee.

To put that in perspective, the median advisory fee for managing $1 million in assets is 1.02%. For larger portfolios, fees typically drop. Industry data shows the rate falls to 0.75% for portfolios over $2 million and can go as low as 0.50% for those above $5 million. Your 0.61% rate sits comfortably below that $2 million threshold, making it a competitive price for the size of your account.

So, in the simplest terms, you are paying less than half the typical fee for a $1 million portfolio. That's the baseline math. The question then shifts from "Is the fee high?" to "What exactly am I getting for this money?" The low percentage rate sets the stage for a deeper look at the value delivered by the services included.

What's the Value? Services vs. Cost

The low percentage rate is just the starting point. The real question is what you're actually buying for that $14,000. A fee-only advisor charging 0.61% on a $2.3 million portfolio is almost certainly focused on investment management-the buying, selling, and rebalancing of securities. That's a specific service, not a full financial plan.

Compare that to the cost of comprehensive planning. If your advisor is also handling tax strategies, estate documents, retirement income modeling, and college savings, those services typically justify a much higher fee. The industry benchmark for a full-service retainer is $2,500 to $9,200 annually. A $14,000 annual fee for pure portfolio management, therefore, looks excessive if you're not getting that broader planning layer.

The math gets clearer when you consider the portfolio itself. If your $2.3 million is held in a simple, low-cost, diversified portfolio-say, a mix of index funds and ETFs-then the active management required to justify a 0.61% fee is minimal. You're paying for a service that could easily be replicated by a low-cost robo-advisor, which typically charges 0.25% to 0.50% annually. In that case, the $14,000 fee is more than double the cost of a basic automated service.

The bottom line is alignment. You should be paying for the specific value delivered. If the advisor's role is simply to manage a straightforward portfolio, the fee might be a ripoff. But if they are providing deep, personalized financial planning that saves you money on taxes or optimizes your retirement withdrawals, then the fee could be a smart investment. The key is to ask: What exactly am I getting for this $14,000? The answer will tell you if the math checks out.

The Real Cost of Doing Nothing

The math of switching is straightforward. If you're paying a 0.61% AUM fee on $2.3 million, moving to a low-cost provider could save you thousands each year. A basic robo-advisor charges 0.25% annually, which would cut your fee to about $5,750. Even a hybrid model with a human advisor, like Betterment's Premium, caps at 0.65%. That's a potential annual savings of nearly $8,000.

But the hidden cost isn't just the fee you're paying. It's the risk of poor advice or missing key financial planning steps. A good advisor adds value through disciplined guidance, helping you avoid emotional decisions during market swings. They can implement sophisticated tax strategies, like tax-loss harvesting, which has been shown to cover the advisory fee for 69% of customers. They also manage risk, ensuring your portfolio aligns with your true tolerance and timeline.

The real question is whether the value delivered outweighs the cost. For a simple, low-cost portfolio, the answer may be no. The advisor's role is minimal, and the fee is a ripoff. But for a complex financial picture-multiple accounts, tax-efficient withdrawals, estate planning-the right advisor can save you far more than their fee through optimized strategies and peace of mind. The risk of doing nothing is not just the fee, but the potential for costly mistakes and missed opportunities.

What to Do Next: A Simple Checklist

The goal is simple: align your fee with the actual value you receive. It's not about finding the cheapest option, but about ensuring you're not paying for a service you don't need. Here's a three-step checklist to audit your own situation.

First, audit your portfolio. Look past the headline AUM fee and examine what you're actually holding. Are your investments simple and low-cost-like a mix of broad-market index funds and ETFs-or are they complex with high-fee actively managed funds? If your portfolio is straightforward, the active management required to justify a 0.61% fee is minimal. In that case, the fee is more than double the cost of a basic automated service. The math gets harder to defend the simpler your portfolio.

Second, ask your advisor for a detailed breakdown. Don't just accept the annual AUM charge. Request a clear fee schedule that itemizes what services are included. Is the $14,000 fee covering just portfolio management, or does it also include tax planning, estate documents, and retirement income modeling? A fee-only advisor should provide a transparent breakdown, as their income is solely from client fees, which can reduce conflicts of interest. If the fee covers a broad range of planning services, it may be reasonable. If it's just for managing a simple portfolio, you're likely paying too much.

Third, get a second opinion or use a fee analysis tool. For a quick, objective check, consider using a tool like Mezzi, which offers affordable options for fee analysis and portfolio management. More broadly, compare your fee to the industry benchmarks: AUM fees above 1.25% for smaller portfolios or 0.5% for larger ones may be excessive. The bottom line is to ensure you're getting what you pay for. If the services don't match the cost, it's time to have a candid conversation or explore alternatives.