Average Money Management Fees: What a $3M Family Actually Pays

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.

There is no official average money management fee. The SEC does not publish one, and the survey figures quoted online use different samples and definitions. What you can check is each adviser’s own fee schedule, which an SEC-registered adviser must disclose in Item 5 of its Form ADV Part 2A brochure, and the dollar amount that schedule produces on your household’s assets each year.

For a dual-income family in California or Washington with $3 million of investable assets, that dollar amount is the number that matters. The difference between two common pricing models can reach a few hundred thousand dollars over 20 years, as the worked example below shows.

Why a percentage hides the real cost at your asset level

Most advisers who charge on assets under management (AUM) quote a tiered schedule: one rate on the first slice of assets, a lower rate on the next slice, and so on. The headline rate sounds small. The dollar fee does not. A household earning $1.2 million a year with a growing brokerage account, 401(k) balances and vested RSU shares can cross from “a percent sounds fine” to a five-figure annual bill without anyone making a decision.

The SEC’s investor bulletin on fees makes the same point with a smaller account: $100,000 growing 4% a year for 20 years. Using the SEC’s scenario, the arithmetic works out to roughly $219,000 with no fee, $208,800 with a 0.25% ongoing fee, $199,000 with 0.50%, and $180,600 with 1% (SEC Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio). Multiply the account by 30 and the gap scales with it.

The four ways advisers charge, and what each rewards

Performance fees, a share of your gains, come up in some older articles as a way to “align interests”. In practice, SEC Rule 205-3 generally permits them only for investors who meet the rule’s wealth thresholds (17 CFR 275.205-3), and Form ADV Item 6 requires an adviser that charges them to explain the conflicts they create, including an incentive to favor the accounts that pay them (Form ADV Part 2 instructions). For a family saving for school and a house, they are rarely relevant.

Worked example: a $3 million Bay Area household over 20 years

Assumptions (illustrative, not a quote from any firm): a married couple in San Mateo County, both W-2 employees at biotech companies, household income $1.2 million, two children ages 4 and 7. They have $3 million in investable assets across a taxable brokerage account, two 401(k)s and vested company shares. We assume a 6% annual return before fees, no new contributions and no withdrawals, with the fee taken once a year after growth.

• Option A, tiered AUM schedule: 1.00% on the first $1 million, 0.80% on the next $2 million, 0.60% above $3 million. Annual fee at a $3 million balance: $10,000 + $16,000 = $26,000 (the fee rises as the balance grows).
• Option B, flat retainer: $18,000 a year, rising 3% a year.
• Baseline: no advisory fee (fund costs ignored in all three).

Two things stand out. First, the AUM bill grows every year because the portfolio grows, so the cumulative gap against the flat option reaches about $525,000 in ending value by year 20. Second, fees paid are only part of the cost. Every dollar paid out also stops compounding, which is why the ending-value gap is larger than the difference in fees paid.

None of this says AUM pricing is wrong. It says the family should decide whether the work justifies the growing bill. If the adviser is also running tax projections, coordinating RSU sales and handling estate documents, the comparison changes. If the service is a model portfolio and an annual review, it probably does not.

What W-2 families should add to the fee comparison

Which assets the fee is charged on

Many AUM agreements bill only on assets held at the adviser’s custodian. For an Apple, Amazon or Genentech household, the largest and riskiest positions are often company stock and 401(k) balances held elsewhere. Ask whether the adviser gives specific advice on those accounts, and whether that advice is included or billed separately.

Fund costs on top of the advisory fee

Form ADV Item 5.C requires advisers to describe other fees you may pay, such as custodian fees and mutual fund expenses, and to disclose that you will incur brokerage and transaction costs. Add the weighted fund expense ratio to the advisory fee to get the all-in rate.

Advisory fees are not deductible

Investment management fees are a miscellaneous itemized deduction, and that category is no longer deductible. The suspension that started in 2018 was made permanent for tax years beginning after 2025 by the One Big Beautiful Bill Act, Sec. 70110 (P.L. 119-21). For 2026, a $26,000 advisory fee billed to a taxable account is paid from after-tax dollars on the federal return. California has not followed this rule: the FTB’s 2025 Schedule CA instructions say the federal suspension of miscellaneous itemized deductions subject to the 2% floor applies but “California law does not conform” (FTB 2025 Schedule CA (540) instructions). On the California return, only the part of these deductions above 2% of AGI counts. At $1.2 million of income, 2% is $24,000, so a $26,000 fee on its own would clear the floor by only $2,000. Where the fee is deducted from an IRA or 401(k) instead of a taxable account matters, and the agreement should say which account pays.

Where the real money is for this family

For a household at this income, the largest recurring costs are usually taxes on RSU vests and concentrated stock, not a few tenths of a percent in fees. In California, wages and long-term gains are taxed at the same state rates, with no preferential rate for gains. Washington has no wage income tax for 2026 but taxes long-term capital gains above an annual threshold, and a 9.9% tax on income over $1 million is scheduled to start in 2028 (Washington DOR). An adviser who charges more but plans RSU sales, 401(k) and mega backdoor Roth contributions, and dependent care benefits across the year can be the cheaper option in total. Our tax management work starts from that full picture.

How to compare fees in 20 minutes

1. Look up each adviser on the SEC’s Investment Adviser Public Disclosure site and open the Form ADV Part 2A brochure.
2. Read Item 5: the fee schedule, whether fees are negotiable, how they are billed and whether you pay in advance.
3. Convert the schedule into a dollar figure on your actual assets today, then on your assets in 10 years.
4. Ask what the fee includes for tax work, equity compensation, estate coordination and your 401(k) and company stock.
5. Read the firm’s Form CRS relationship summary, a short plain-English document on services, fees and conflicts (Investor.gov on Form CRS).

For more on how fee models differ between large banks and independent advisers, see wealth management fees at big banks vs private managers and how much a wealth manager costs. On who is legally required to act in your interest, see what percentage of financial advisors are fiduciaries.

Common mistakes when families evaluate advisory fees

• Comparing percentages instead of dollars. 0.80% and 1.00% look close. On $3 million the difference is $6,000 a year before compounding.
• Ignoring what happens as savings grow. A household saving $200,000 a year adds to the fee base every year under AUM pricing.
• Paying for investment selection only. A diversified index portfolio is inexpensive to run. The value for a busy W-2 family is usually in tax, equity compensation and estate decisions.
• Not asking whether the fee is negotiable. Item 5 requires the adviser to say.

What to write down for your kids

Your children will one day hire advisers too, or decide not to. A one-page note on why you chose your fee arrangement, what you expected in return and how you checked it each year is more useful to them than any fee table. Conversations fade. Documentation compounds. Our family governance work helps families record decisions like this one.

Frequently asked questions

Is 1% a reasonable fee on $3 million?

It depends on the work included. On $3 million a flat 1% is $30,000 a year, and it rises as assets grow. Compare it against what the adviser actually does: tax projections, RSU and ESPP planning, estate coordination and advice on your 401(k). A tiered schedule, a flat retainer or a narrower scope may cost less for the same work. Convert every quote to dollars before you compare.

Can I deduct financial adviser fees on my 2026 return?

Not on your federal return. Investment management fees are a miscellaneous itemized deduction, and the One Big Beautiful Bill Act (P.L. 119-21, Sec. 70110) made the 2018 suspension of that category permanent for tax years after 2025. California has not conformed, so on a California return the fee may count toward miscellaneous deductions, but only the portion above 2% of AGI is deductible.

Where do I find an adviser’s actual fee schedule?

Search the adviser on adviserinfo.sec.gov and open the Form ADV Part 2A brochure. Item 5 must describe how the firm is paid, give its fee schedule, say whether fees are negotiable and describe other costs such as fund expenses and brokerage. The Form CRS summary gives a shorter version in plain English.

Next step

Pull your current adviser’s Form ADV, convert the fee to dollars on today’s balance and on your projected balance in 10 years, and list what you get for it. If you want a second view of that math alongside your tax picture, the Tax & Wealth Assessment from Age Five Family Office™ covers it.

This is general education, and the right choice depends on your family’s full picture.

Written by

Kevin Luu

Co-Founder and Chief Learning Officer, Bright Advisers

Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.

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