By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.
There is no official average wealth management fee for 2025 or 2026. No regulator publishes one, and fees do not reset each January the way tax limits do. The figure most families hear is about 1% of invested assets per year on the first $1 million, often stepping down on larger balances. For a California or Washington family with $2 million to $5 million invested, the question that matters is not the average but what your own quote adds up to in dollars, what sits on top of it, and how it grows as your RSUs vest.
Why the “average fee” is the wrong number for a two-income W-2 family
A household earning $750,000 to $3 million in salary, bonus and equity usually builds assets fast. Vested RSUs, ESPP shares, two 401(k)s and 529s can take a family from $1 million to $4 million within a few years. An asset-based fee is a percentage of that balance, so the fee rises every time a vest lands, even when the work behind it does not change much.
That is not automatically bad. A family with concentrated employer stock, equity grants in two companies and a move between California and Washington on the horizon may need more work, not less. The point is to see the fee in dollars, year by year, and compare it with what you are actually getting.
What goes into the total cost, beyond the headline percentage
The advisory fee is one layer. A full picture for 2026 includes:
- The advisory fee. Charged as a percentage of assets, a flat annual retainer, or hourly. Each registered adviser must publish its fee schedule, whether fees are negotiable, and how it bills in Form ADV Part 2A, Item 5 (SEC Form ADV Part 2 instructions).
- Fund expenses. Expense ratios on the funds in your accounts are deducted inside the fund, so they usually do not show up as a separate line on your statement.
- Custody, trading and cash. Some accounts carry trading or custody charges, and uninvested cash may sit in a low-yield sweep. Item 5.C of Form ADV Part 2A covers these other costs.
- Wrap programs. A single “wrap” fee can bundle advice, trading and custody. That can be simpler, or it can hide what each piece costs.
- Tax cost. Turnover in a taxable account creates capital gains. In California those gains are taxed as ordinary income, with no lower rate (FTB).
Small differences compound. The SEC’s own investor bulletin shows that on $100,000 growing at 4% a year for 20 years, a 0.50% annual fee leaves about $10,000 less than a 0.25% fee, and a 1% fee leaves nearly $30,000 less (SEC Investor Bulletin). At your balance, multiply those gaps by 25 or 40.
Worked example: how an asset-based fee grows with RSU vests
Assumptions (illustrative, not a market quote): a Bay Area family with two W-2 earners, household pay of about $900,000, kids aged 4 and 8. They have $2.5 million under management today and add $250,000 a year from vested RSUs and savings. We assume 6% annual growth. We compare three hypothetical fee quotes, each charged on the balance at the start of the year.
| Year | Start balance | Flat 1% | Tiered (1% / 0.75% / 0.50%) | Flat retainer |
|---|---|---|---|---|
| 1 | $2,500,000 | $25,000 | $21,250 | $20,000 |
| 2 | $2,900,000 | $29,000 | $24,250 | $20,000 |
| 3 | $3,324,000 | $33,240 | $26,620 | $20,000 |
| 4 | $3,773,440 | $37,734 | $28,867 | $20,000 |
| 5 | $4,249,846 | $42,498 | $31,249 | $20,000 |
| 5-year total | $167,473 | $132,236 | $100,000 |
The tiered schedule charges 1% on the first $1 million, 0.75% on the next $2 million and 0.50% above $3 million. The flat 1% fee rises 70% in five years while the family’s situation is roughly the same. The gap between the flat 1% and the retainer is about $67,000 over five years, before fund expenses. None of these is the “right” price. A retainer that covers only investments may be worse value than a percentage fee that also covers equity compensation, tax planning and estate coordination.
What to ask about which assets are billed
The billing base changes the number as much as the rate does. Ask these before signing:
- Are 401(k) balances held at your employer’s plan billed, or only accounts the adviser holds?
- Are 529 plans and custodial accounts for the kids included?
- Is employer stock you are told to hold (for example, during a trading window) billed at the full rate?
- Is cash held for a home purchase or a tax payment billed?
- Does the fee cover equity compensation planning, tax projections and estate coordination, or are those extra?
Unvested RSUs are not in your accounts yet, so they are normally not billed. They do show why the fee will rise: the day they vest and land in a brokerage account managed by the adviser, they join the base.
Are wealth management fees tax-deductible in California or Washington?
Federal: no. Investment advisory fees were miscellaneous itemized deductions, and P.L. 119-21 (section 70110) made their suspension permanent for tax years after 2025 (P.L. 119-21).
California: California did not follow the federal suspension. Expenses to manage or protect income-producing property can still be claimed on Schedule CA (540), subject to a 2% floor (FTB Schedule CA (540) 2025 instructions). Using the year 1 flat 1% fee above: $25,000 minus an $18,000 floor (2% of a $900,000 AGI) leaves $7,000. At the 10.3% California bracket (2025 schedule, $742,958 to $891,542 for joint filers), that is worth about $720. California also limits itemized deductions once federal AGI passes $504,411 for joint filers (2025), which can shrink the benefit further. Ask your CPA how your fee is treated.
Washington: there is no individual income tax for 2026, so there is no state income tax deduction to claim (WA DOR). Washington has enacted a 9.9% tax on AGI over $1,000,000 starting January 1, 2028. How investment expenses will be treated under it has not been published yet.
Performance fees and who can be charged them
Some advisers charge a share of gains instead of, or on top of, an asset-based fee. For SEC-registered advisers, federal rules generally allow this only for investors who meet the wealth test in Rule 205-3. For contracts entered into from June 29, 2026, the dollar tests are at least $1,400,000 managed by the adviser, or net worth over $2,700,000 including assets held jointly with a spouse (SEC Order IA-6961). The value of your primary residence does not count toward that net worth (17 CFR 275.205-3). Many dual-income tech and biotech households qualify. A performance fee can reward risk-taking with your money, so ask how it is calculated and whether there is a high-water mark.
How to find your real number in 15 minutes
- Look up the adviser on adviserinfo.sec.gov and open Form ADV Part 2A. Read Item 5 for the fee schedule and whether it is negotiable.
- Read the firm’s Form CRS, the short relationship summary that explains fees and conflicts in plain language.
- Add up last year’s advisory fee from your statements, plus the weighted expense ratio of your funds. Divide by your average balance. That is your all-in rate.
- Write down, in one sentence, what you got for it: a tax projection, an RSU sale plan, an estate update, or only rebalancing.
Our investment and risk management and tax management pages describe what we include. For more on fee structures, see how much a wealth manager costs and our comparison of big-bank and private manager fees.
What to document for your kids
Children in these households rarely see what advice costs or why their parents pay for it. When you choose or change an adviser, write a short note: what you pay in dollars, what you expected in return, and how you will judge it next year. As Kevin Luu puts it: “Your kids don’t need to inherit your portfolio. They need to inherit your decision-making process.” A one-page record like this is the kind of entry families keep in a FamilyKnowledge® Library, and the family governance page explains how we structure it.
Frequently asked questions
Is 1% a year too much for wealth management?
It depends on the balance and the scope. On $1 million, 1% is $10,000 a year. On $4 million it is $40,000. If that fee covers equity compensation, tax planning and estate coordination for a family with concentrated stock, it may be reasonable. If it covers rebalancing a few index funds, it is a lot. Compare the dollar amount with the work, not the percentage with an average.
Can I negotiate a wealth management fee?
Often, yes. Form ADV Part 2A must say whether fees are negotiable, and the SEC bulletin encourages investors to ask. Families with larger balances commonly ask for breakpoints, a cap, or a switch to a flat retainer. Ask for any agreed change in writing, and check that it appears in the next quarterly bill.
Next step: pull last year’s statements and calculate your all-in rate in dollars. If you would like a second set of eyes on it, our Tax & Wealth Assessment reviews your fees alongside your equity compensation and tax picture.
This is general education, not individual advice. The right fee structure depends on your family’s full picture.
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.
Connect on LinkedIn → · About KevinThis is part of how we approach Investment & Risk Management for high-income W-2 families at Bright Advisers.
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