At Next Portage Financial, one of the most common questions we get from clients is how fees are charged and what the different fee options are. We believe that financial literacy is key to making informed financial decisions, so we take the time to explain these options and so that you can choose what’s best for your situation.

Here are some key points to consider when deciding between two common fee structures: Assets Under Management (AUM) and a flat fee.

An AUM fee is a percentage-based fee that an advisor charges based on the total value of the assets he or she manages for you.

• This structure can be particularly helpful for those starting with smaller portfolios, as the fees are proportional to the assets managed.
• Since the advisor’s income increases as your portfolio grows, there is a direct incentive to help you succeed which can further drive motivation and performance.
• The advisor is also continuously overseeing and adjusting the portfolio as needed which can be great for investors who prefer to be more hands-off.
• AUM fees can become expensive as a portfolio balance grows so consider checking in with your advisor from time to time to explore possible percentage reductions.

A flat fee is a fixed dollar amount charged for advisory services. This fee could be paid annually, monthly, or even as a one-time payment depending on the services provided.

• This structure can be particularly helpful for those who prefer to be heavily involved with managing their money buy still wish to consult with an advisor.
• Since flat fees do not change as the asset values change, they are very predictable for investors.
• For those with large portfolios, a flat fee could result in lower overall costs compared to an AUM model.
• With flat fees being fixed in nature, advisors may not be able to dedicate as much time to your situation as you would wish or may have to charge extra for additional services that would otherwise be included under the AUM model.

Which Fee Structure Should You Choose?

The right fee structure for you depends on your general preferences, personal financial situation, portfolio size, and the kind of relationship you want with your advisor. At Next Portage Financial, we’re here to guide you through this decision. Our advisors aim to help you understand both options and select the fee structure that best fits your goals and financial needs. Connect with one of our advisors today to discuss which approach works for you and how we can build a plan that aligns with your future.

This material is being provided for informational or educational purposes only. Those seeking information regarding their particular investment needs should contact a financial professional. The opinions expressed were current as of the date of posting but are subject to change without notice due to market, political, or economic conditions.