A 2% advisor fee on a $300,000 portfolio could cost $220,000 over a decade — here's how to tell if you're overpaying

When it comes to financial advisors, many investors wonder how much they should be paying in fees — and whether it's worth it. There are several fee structures to choose from (as well as the option of doing it yourself). So how do you know which option works best for you?

Take Josh, for example. His financial advisor is managing a $300,000 portfolio. So far, the returns have been a whopping 30% but Josh is also paying a 2% fixed fee to his advisor.

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That adds up to $6,000 in total fees annually, though as his total invested assets increase over time, he'll pay more. Assuming he didn't invest any more money, the cumulative fees paid on a compounding 30% return over 10 years mean his advisor would earn more than $220,000.

While Josh is happy with the performance of his portfolio, he knows it's unlikely he'll continue to see such high returns over the next decade — or beyond. And he's wondering if he should consider other options for his money instead.

Different types of advisor fee structures

Whether you want to start working with a financial advisor or, like Josh, you're not sure if there are better options available to you, it's important to first understand the different types of fee structures charged by financial advisors.

For ongoing investment management, the most common fee structure is assets under management (AUM), where you pay your advisor an annual percentage of the balance. Indeed, the majority (92%) of advisory firms incorporate AUM fees in some way, according to research from Kitces .

They might also offer a tiered schedule, which means as you hit higher tiers, you'll pay a progressively lower fee.

The general industry benchmark for AUM fees is around 1%, with rates typically falling somewhere between 0.5% and 1.25%, according to District Capital Management's 2026 fee analysis .

Higher fees are typically associated with more complex needs, which can include "tax planning needs, multiple income sources, equity compensation, federal benefits coordination, and ongoing investment management layered on top of planning," according to the analysis.

Kitces research found that for portfolios under $1 million, fees typically range between 1% and 1.2% . So Josh's 2% fee is definitely on the high side. And Josh doesn't have complex financial planning needs at this point in life.