Advisors debate flat fees and fee transparency

A dozen financial advisors and planning professionals met last week outside Chicago for the Transparent Advisor Movement’s first Flat Friday and discussed how to explain client fees. The group compared flat-dollar charges and asset-under-management (AUM) pricing and reviewed cases that illustrate fee opacity.

The meeting took place in a suburban office near Warrenville. Attendees included advisors launching new RIAs and established planners who have shifted parts of their practices toward flat-fee relationships. The movement began in September 2022 and plans local Flat Friday events in Philadelphia, San Diego, Denver, Durham, North Carolina, and Washington, D.C.

Members agreed that clear disclosure of all fees paid by clients matters more than requiring any single pricing model. Erik Barnes, founder of Retirement Portfolio Partners in Warrenville, described transparency as not being tied to a pricing schedule and said advisors can be transparent under multiple fee arrangements as long as clients understand what they pay.

A recurring example at the meeting involved a client whose prior statements, when analyzed, showed about $36,000 in annual fees on a roughly $1 million portfolio. Charlie Horonzy, founder of Focused Up Financial, calculated the total by adding AUM-related charges and underlying fund management fees; the client had expected fees near $500. Horonzy warned that flat-dollar fees can sound larger to prospects than a percentage fee, noting the psychological gap between a one-time figure and a percentage.

Linda Rapisardo of Canela Wealth recommended walking clients through their statements so they can see the full cost of their current arrangements and judge value. She said showing actual fee totals gives clients information to compare options rather than simply criticizing another firm’s practices.

Participants also discussed how advisors’ backgrounds create bias. James Brewer of Envision Wealth Planning said he recently surrendered his insurance license to remove a potential conflict and make his recommendations clearer. Brewer described disclosing one’s bias as part of transparency.

Tech and practice-management topics came up. Alex Graf of Modelist said many advisors avoid implementing systems that could lower costs because they fear fee conversations with clients. Graf described fee discussions as a moment some advisors worry might cost them a client, which discourages changes that could produce lower fees or better tools.

Organizers kept the event low-key, providing basic food and drinks and avoiding sponsor-driven hospitality or promotional swag, consistent with the movement’s annual conference rules that ban vendor pressure and branded giveaways. Attendees left with practical takeaways for client conversations and practice design, including showing clients total fees, explaining personal and firm biases, and preparing to justify flat-dollar pricing when used.