Breakpoints Are a Marketing Tool. Here's the Real Cost of AUM Fees at Every Level.

I’m going to do something most financial advisors would never do. I’m going to show you, in actual dollars, what your advisory fee actually costs on a $3 million portfolio. Not in percentages. Not buried in a disclosure document. In real money that leaves your account every year.

The reason most advisors won’t do this is simple: when you see the number, you’ll have questions. And those questions are uncomfortable for anyone whose income depends on you not asking them.

The Annual Number

Most advisors advertise “about 1%.” But at $3 million, most firms apply a breakpoint discount. The industry standard lands around 0.78%. That sounds like a deal — until you do the math. On $3 million, 0.78% is $23,400 per year.

That’s the advisory fee — what your advisor charges for managing your portfolio and providing financial planning. It’s deducted directly from your account, usually quarterly, so you never write a check and you never see an invoice. Most people have no idea the money is leaving.

Take a moment with that number. Twenty-three thousand dollars a year. That’s a family vacation to Europe every year. A year of property taxes in Westlake Hills. Two years of car payments — every single year — and you’d still have change left over.

On a $4 million portfolio, it’s $29,600. On $5 million, it’s $35,500.

The 10-Year Number

Annual fees are easy to overlook because they’re invisible. But they compound. Over 10 years on a $3 million portfolio at 0.78%, you’ll pay approximately $234,000 in advisory fees. That’s not a projection or a scare tactic — it’s arithmetic.

And here’s the part that gets people: as your portfolio grows, so does the fee. If your $3 million grows to $4 million because the market performed well, your advisor just got a $6,200 raise. Not because they did more work. Not because your plan got more complex. Not because they made a brilliant call. Because the market went up.

You took the risk. They got the raise.

And when the market drops? Your fee goes down slightly — but the service doesn’t change. You still need the same planning, the same calls, the same hand-holding. Arguably you need more. But the advisor’s incentive structure says otherwise.

The Question Nobody Asks

In 25 years of wealth management — 17 of them at Charles Schwab — I can count on one hand the number of clients who walked in knowing what they paid their previous advisor in actual dollars.

Everyone knew the percentage. “Oh, it’s about 0.78% — I got the breakpoint discount.” They thought they’d negotiated a good deal. But when I said, “So on your $3.2 million, that’s still about $25,000 a year,” the room went quiet every single time.

It’s not that 0.78% is inherently wrong. It’s that most people have never been given the chance to evaluate the number in a way that feels real. Percentages are abstract. Dollars are concrete. And $23,400 a year is a lot of concrete.

What You’re Actually Paying For

A good financial advisor provides real value. Tax-smart withdrawal strategies, Roth conversion planning, Social Security optimization, estate coordination, behavioral coaching when markets get ugly — these services genuinely matter and can save or generate far more than their cost.

The question isn’t whether advice has value. It’s whether the pricing model makes sense.

Under the percentage model, a client with $5 million pays $35,000 a year and a client with $2 million pays $15,000 — even if they receive the exact same service. Same meetings. Same plan. Same phone calls. Same investment management. The only difference is the size of the account the advisor happens to be looking at.

That’s not a fee for service. That’s a fee for the privilege of having more money. And it gets more expensive every time the market does its job.

A Different Model

At Sevey Wealth, every client pays $10,000 per year. Whether your portfolio is $2 million or $20 million. Same comprehensive planning. Same investment management. Same direct access to me.

Over 10 years, a client with $3 million pays us $100,000 total. Under the standard 0.78% breakpoint model, they’d pay $234,000. That’s $134,000 that stays in their retirement instead of leaving it. And against the 1% rate that smaller portfolios pay? The gap is even wider.

What would you do with an extra $134,000?

Find Your Number

Here’s how to find your real number in two minutes. Pull up your most recent account statement. Look for “advisory fee” or “management fee” — it’s usually listed as a quarterly deduction. Multiply that by four. That’s what you paid last year.

Now multiply it by 10.

If you’d rather have someone walk through the numbers with you, I offer a complimentary 30-minute Retirement Fee Review. No pitch, no obligation — just the math on your specific situation so you can make an informed decision.

Book a complimentary Retirement Fee Review at seveywealth.com/contact.