AUM Fee Compression. Reality or Fiction?
AUM fees are compressing, and AI is why the next four years look different from the last four. From 2020 to 2024, asset-based fees for clients with $1.5 million or more declined by two basis points on average, according to Cerulli Associates. Two basis points is not a crisis. But it is a direction, and "AI creates commoditization around financial planning," according to Eric Sontag, president of Wealthspire Advisors. The advisors who are not paying attention to that statement are the ones who will feel it first.
What The Numbers Actually Show
From 2020 to 2024, asset-based fees declined by two basis points on average for clients with $1.5 million or more in assets, according to Cerulli. Advisors expect those rates to fall by another basis point by 2026.
That sounds small. But the direction is clear, and the trend accelerates at the high end. By 2026, 83% of financial advisors expect to charge less than 1% for clients with more than $5 million in investable assets, and the average fee for clients with more than $10 million is expected to be around 66 basis points.
Here is the counterintuitive part. AUM has only grown more dominant as a primary charging method in recent years. In 2022, 82% of advisors reported using AUM as their primary pricing method. By 2024, that figure rose to 86%, according to 2024 Kitces Research.
The fee structure is not dying. What is changing is the ability to charge it without proving your value at every tier.
What AI Is Actually Replacing
OpenAI's GPT-5.4 was released earlier this year and is marketed as "ideal for financial reasoning and Excel-based modeling." Anthropic recently launched wealth-management-specific plugins for Claude and partnered with independent brokerage giant LPL Financial.
These tools are aimed at advisors today. Consultants expect similar capabilities to reach investors directly within a few years, much like discount brokerage and robo-advisors did before them.
What that means practically: basic retirement projections, cash flow modeling, and tax optimization scenarios are no longer tasks that justify a fee on their own. Clients can get a reasonable first answer from an AI tool in minutes. If your value proposition stops at portfolio construction and market performance, that is the conversation you will start having in client meetings.
Financial advisors who have focused their value proposition solely on their ability to build portfolios and beat the market have seen their fee rates plummet in recent years.
What Advisors Who Are Holding Fees Are Doing Differently
By adding additional services to their traditional offering of asset allocation and investment management, advisors have been able to explain to clients that their AUM fee encompasses much more, keeping their fee level constant over time. Clients are now receiving access to alternative investments, comprehensive financial planning, trust and estate planning, bill pay services, insurance reviews, and in some cases, RIAs are processing tax returns on behalf of their clients.
Niche clarity is playing a similar role. An advisor who specializes in business exit strategy, divorce financial planning, or concentrated stock positions is not a commodity. A generalist charging 1% with a vague value proposition is.
Subscription-based financial planning carried a median annual fee of $4,500 in 2024, up from $3,000 in 2022, according to 2024 Kitces Research. That increase signals something important: pricing power still exists for advisors who define what they do and for whom.
Your Online Visibility Is Where The Fee Defense Starts
Advisors who hold premium fees share one trait. Clients know exactly what they do, who they do it for, and why they are worth it before the first conversation.
That clarity has to exist online. AI-powered search tools are part of how prospects evaluate advisors before they ever pick up the phone. Advisors who can clearly define their processes, remain flexible in their fee structures, and adapt to offer a broader range of services will be better positioned to distinguish themselves from their peers, according to Cerulli's Kevin Lyons.
A complete, specific profile on FinancialAdvisors.com is a great way to build that positioning. If you have not claimed and optimized yours, that is the place to start. And if you want to know how visible you are to AI search tools specifically, the FAVIR waitlist is open now. Grab your spot below.
The advisors holding their fees are not holding the line by luck. They made their value impossible to ignore.
June 2026 Market Snapshot
- Equities hold at record highs: The S&P 500 closed May at 7,580 and the Nasdaq at 26,972, with all three major indexes hitting fresh all-time highs on the final trading day of the month. The S&P 500 is up nearly 8% year-to-date, marking its fourth consecutive year of gains. (CNBC / IndexBox)
- New Fed chair, same holding pattern: Kevin Warsh was confirmed as Fed chair on May 13, with his first FOMC meeting set for June 16 to 17. J.P. Morgan's base case is for rates to hold steady through year-end, with inflation still elevated. (Chase / J.P. Morgan)
- Inflation still above target: The Fed's latest projections put both headline and core inflation at 2.7% by year-end, above the 2% target. GDP growth is expected at 2.4% for 2026, with unemployment projected at 4.4%. (Yahoo Finance)
- Earnings still delivering: 84% of S&P 500 companies beat Q1 2026 estimates, on pace for the highest beat rate since Q2 2021, with analysts projecting full-year earnings growth of 21.3%. (FactSet)
What Advisors Could Tell Their Clients
The rally is built on real earnings strength, not just sentiment. But the S&P 500 is trading near 22 times forward earnings, well above its 10-year average, and credit spreads have widened modestly even as equities climb. A new Fed chair navigating a divided committee, inflation stuck above 2.7%, and tariff costs still flowing through supply chains means a pullback could come quickly if conditions shift. The advisors adding the most value right now are the ones helping clients stay anchored to their long-term plan rather than reacting to headlines at record highs.
3 Lead Generation Ideas
Create a Formal Referral Program With Your Existing HNW Clients
Most advisors wait for referrals to happen naturally. The ones growing fastest ask directly and make it easy. Create a form for a client to complete with people they know, so you can reconnect with those contacts even if they move or change their phone number. Once the form is completed, simply ask if it would make sense for you to talk to any of those people about their finances.
Build a CPA and Estate Attorney Referral Network
These two professions sit directly in the financial life of your ideal client. A relationship with one good CPA can be worth more than 12 months of advertising. Meet them. Bring value first.
Offer Pro-Bono Financial Planning Workshops for Nonprofit Boards
Nonprofit board members are often high-net-worth individuals. Giving your time creates goodwill and genuine connection. The relationship often converts over time.
Marketing Tactic: 60% of Google Business Profiles Are Underutilized
Most financial advisors spend thousands on their website and almost nothing on the one marketing asset Google itself controls: the Google Business Profile (GBP). That is worth fixing.
A Google Business Profile is a free listing that appears when someone searches your name, your firm, or "financial advisor near me." It shows up before most organic search results and includes your photo, phone number, reviews, and website link. It is often the first thing a prospect sees before they ever reach your site.
The problem: most advisors either have not claimed their profile, or they claimed it years ago and never touched it again.
Why This Matters More Now
Search behavior has shifted. AI tools like Google's AI Overview and ChatGPT increasingly pull structured data from sources like your GBP when answering local queries. An incomplete or dormant profile is not just a missed SEO opportunity. It is a gap in the data record AI systems use to decide whether to recommend you. Profiles that are actively updated on a monthly basis see higher engagement, by up to 24%.
What Separates an Active Profile From a Forgotten One
Reviews are the most influential element, and most advisors have almost none. The advisors with 20 or 30 reviews are not luckier. They have a system. They ask every satisfied client, at the right moment, with a direct link to the review form. One study found that 87 percent of consumers read online reviews before choosing a local service business. And yes, you can do this in a compliant way!
Beyond reviews, Google rewards activity. Advisors in the top local results are posting updates regularly, responding to reviews, and filling out every section including services and specialties.
Want help optimizing your GBP?
Introducing FAVIR: The Financial Advisor Visibility Index Rating
Your clients are already asking AI tools which advisors to trust. The question is whether those tools can find you, verify you, and recommend you with confidence.
FAVIR is an AI-powered online visibility scoring system being built by FinancialAdvisors.com. It measures your AI visibility across the dimensions that matter most: your website structure, your directory presence, your local trust signals, your credentials, and the consistency of your online footprint. You get a clear score, a breakdown of where you stand, and a roadmap for how to improve.
Founding partners who join early will be first in line when FAVIR launches a couple of months from now, receive dedicated onboarding support, and lock in preferred pricing before it opens to the public. The window for founding partner access is limited and will not reopen at this level. See what FAVIR measures and reserve your free spot below.
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