How Can RIAs Explain Their Fees to Clients?

Fee conversations now start before the first meeting and continue throughout the client relationship. Form ADV already requires RIAs to disclose how they are paid, but clients often need that information translated into something more practical: how much they pay, what the fee covers, and what they receive in return.

According to statistics, an average bundled AUM fee was 0.96%, down from 1.05% in 2023, while average annual retainers increased 52% to $6,815. RIA retainers averaged $7,550. As fee models continue to evolve, RIAs need to make pricing easy to understand and connect it to the work they actually deliver.

How Can RIAs Show the Value Behind Their Fees?

An AUM percentage is abstract until it is connected to specific services. A client with $1 million invested at a 1% advisory fee pays approximately $10,000 per year. The important question is what that $10,000 covers.

Depending on the household, the answer may include tax-aware portfolio management, withdrawal planning, estate coordination, or guidance during a job change or liquidity event. Vanguard’s Advisor’s Alpha research has also found that disciplined financial planning, behavioral coaching, asset allocation, and rebalancing can add value over time, although the impact varies by client.

How Should RIAs Explain the Full Cost of Advice?

Clients should be able to see the advisory rate, applicable breakpoints, billing frequency, and whether the fee is calculated by tier or as a blended rate.

For example, a $2.5 million portfolio subject to rates of 1.00%, 0.75%, and 0.50% across different tiers produces an effective blended fee of 0.80%, or $20,000 per year. Showing the calculation removes ambiguity and makes the actual dollar cost clear.

RIAs should also explain costs that are outside the advisory fee, including fund expense ratios, platform or overlay fees, custody charges, and separate tax or legal services when applicable. Form ADV Part 2A provides the formal disclosure, while a short plain-language fee summary can make the same information easier to review during onboarding and annual meetings.

A written service menu helps clients connect the fee to the work they receive. Portfolio management, financial planning, tax-aware trading, beneficiary reviews, family meetings, and other services should be clearly identified as included or billed separately.

Different fee models may also make sense for different households. Clients with high incomes but relatively low investable assets, for example, may be better suited to a retainer or subscription model than an AUM schedule. The 2026 Datos Insights survey found that subscription fees averaged $595 per month, while hourly rates averaged $307.

Explaining why the firm uses a particular fee model, and when another model might be more appropriate, can make pricing feel more structured and less arbitrary. It also gives both sides a clearer understanding of what falls within the engagement.

What Other Areas Can Help RIAs Deliver More Client Value?

Fee discussions can also include operational value that clients may not see without a clear explanation.

Securities class action recovery is one example. Settlements totaled approximately $8 billion in 2025, creating a significant pool of potential recovery for investors.

Platforms such as 11th.com automate the operational process of monitoring settlements, matching eligible holdings, filing claims, and payout delivery. For RIAs, recovery alpha provides another way to help clients capture value from assets they already hold without adding another manual process to the advisor’s workflow.

What Will RIA Fee Models Look Like in 2026 and Beyond?

RIA pricing is becoming more varied as firms combine AUM fees with retainers, subscriptions, and hourly services. At the same time, clients have more ways to compare advisory costs and understand what they receive for those fees.

For RIAs, the basic framework remains simple: show the dollar cost, explain what is included, identify additional expenses, and review the work completed for the client. A clear fee conversation gives clients a better understanding of both the price and the services behind it.

FAQ

What is a typical RIA AUM fee in 2026?

Average bundled AUM fees have recently been just under 1%, although actual rates vary by firm, portfolio size, services, and fee tiers.

How should an advisor show the dollar cost of their fee?

Multiply the advisory rate by the portfolio value, show applicable breakpoints, and provide the estimated annual dollar cost alongside the services included.

What costs are usually outside the advisory fee?

These may include fund expense ratios, certain platform or custody charges, and separate tax, legal, or other professional services when they are not included in the advisory agreement.

A service menu shows clients what their advisory fee covers and which services would be billed separately.

What counts as proof of value for an RIA?

Documented planning work and completed processes can demonstrate value, including tax strategies, risk management, estate-planning actions, and withdrawal planning.