What Is a Net Worth Fee?
A net worth fee is a charge based on a client’s total net worth, usually calculated as a percentage of assets under management. Financial advisors and wealth managers often use this model instead of hourly or flat fees.
How Net Worth Fees Work
The fee is typically applied to investable assets, such as cash, stocks, bonds, and mutual funds. Primary residences and certain liabilities may be excluded, depending on the firm’s policy. Rates often decline as net worth increases.
Why Net Worth Fees Matter
Net worth fees align advisor incentives with client growth, since compensation rises as assets grow. They provide transparency and predictable costs for high-net-worth individuals. For more details on fee structures, see the U.S. Securities and Exchange Commission’s investor guidance at SEC Investor Basics.
