Podcast Summary: BiggerPockets Money Podcast
Episode: Debate: AUM vs Flat Fee – Which is Better?
Date: February 6, 2026
Hosts: Mindy Jensen and Scott Trench
Guest: Ryan Sterling, CEO of NerdWallet Wealth Partners
Episode Overview
This episode tackles a heated topic in the world of financial planning: Are assets under management (AUM) fees or flat fees a better way to pay for financial advice? Hosts Mindy Jensen and Scott Trench—both strong advocates of the flat fee/advice-only model—invite Ryan Sterling, CEO of NerdWallet Wealth Partners, to defend the AUM approach. The discussion is aimed at listeners serious about personal finance and the Financial Independence, Retire Early (FIRE) movement.
The episode highlights the inherent biases, walks through detailed arguments for and against the AUM model, and explores the nuances, conflicts of interest, psychological impacts, and evolving best practices in financial planning compensation.
Key Sections & Insights
What is Financial Planning? (06:00–11:17)
- Ryan Sterling explains his firm's threefold approach: financial planning, coaching, and investing.
- Planning: "It's basically doing a diag of where you currently are and building that roadmap from where you are to where you need to get to... The financial plan is that roadmap." (06:24)
- Coaching: "Number one, holding clients accountable... Number two, to help coach through decisions that are going to be made." (09:26)
- Investing: "We build and manage investment portfolios that are in alignment with the client's goals..." (09:26)
- Scott agrees, emphasizing the value of a written plan and customizable checklist.
Financial Planning Compensation Models: Definitions & Framing (11:17–16:41)
- Scott outlines common fee structures:
- Hourly/Project-based
- Flat Fee/Subscription
- AUM (Assets Under Management) Fees
- Commissions
- Fee-Only/Hybrid/Fee-Based
- Ryan: "Historically, I've always stayed away from selling products. Of all... fee structures, that one [commissions] has the biggest conflicts of interest." (14:25)
- Mindy expresses skepticism toward commission-based CFPs, referencing industry biases and her evolving stance.
How AUM Fees Work in Practice (22:36–26:15)
- Ryan describes his firm's AUM schedule—0.9% on portfolios <$500K, with quarterly billing—emphasizing transparency. AUM is only charged on assets managed, not outside holdings.
- "When clients get their statement, it's on the very first page..." (22:36)
- Mindy appreciates this visible transparency, countering the hidden-fees criticism.
Notable Moment:
Ryan shares:
"We had a client... interviewing advisors. He was between us and another firm that was flat fee only... He came to me and said, 'I'm going with you because you guys are less expensive.' I said, 'Just being fully open and transparent, we're actually more expensive.' ...He just feels better because he doesn’t feel like he’s writing a check..." (24:39)
Core Concerns & Debate: Is AUM Worth the Cost? (26:15–39:47)
Concern 1: Expense
- Scott runs a cost simulation projecting AUM vs. flat fee over 30 years. He finds AUM often costs significantly more, especially as wealth grows.
- e.g., "$865,000 paid under AUM versus $225,500 flat fee over 30 years on a $2M starting balance."
- Ryan agrees costs compound, especially for DIY- or FIRE-enthusiast clients, but counters:
- "Our core clients... are at the start of their wealth building journey. For many, AUM is less expensive initially and provides more discipline." (29:38)
Concern 2: Passive/Automatic Deduction
- Scott: Automatic, less 'painful' deductions may lead to less regular reevaluation of value.
- Ryan: Clients stick with the plan longer under AUM; when people pay flat fees upfront, they’re more likely to cut the service, and may backslide on their plan.
Concern 3: Conflicts of Interest
- Scott: Worries about advisors steering clients to keep money ‘in house’ to maximize AUM, discouraging paying off mortgages, alternative investing, or charitable giving.
- Ryan: Argues his firm has built-in fee breaks and prioritizes long-term, trust-based client relationships. Decisions are made visible in the plan and tailored to client preferences, exemplified by allowing a client to pay cash for a home even if it meant less AUM.
- "I am much more incentivized to keep this client... for life, as opposed to convincing him to keep an extra $600,000 in the portfolio because we'd make a little more." (43:26)
Flat Fee vs AUM for Different Clients (46:35–57:23)
- High-Net-Worth Clients: Ryan finds flat fees usually higher for ultra-high-net-worth clients, and good planning can more than pay for itself. He distinguishes between planners who focus primarily on planning vs. those with strong investing expertise.
- Quality of Advice: Debate on whether top talent is more prevalent in AUM or flat fee space. Ryan notes good planners exist in both and recognizes the rise of flat fee planners as industry evolves.
- "I've yet to see a firm do it at scale that can work with that eight-figure client." (51:51)
- "I think... there are an abundance of quality flat fee financial planners... and [they will] begin taking market share from the AUM model." – Scott (56:21)
The Psychology of Fees & Client Behavior (36:38–39:29, 57:23–67:35)
- Upfront flat fees feel more painful, causing some to discontinue advice prematurely.
- Mindy: "I've got today Mindy problems, and I've got future Mindy problems, and I don't want to pay for future Mindy problems with today Mindy money." (67:24)
- Scott: Contrasts Mindy’s mindset with his own logical/analytical approach, remaining skeptical of the AUM “invisibility.”
Industry Outlook & Evolutions (57:23–59:42)
- Ryan predicts ongoing fee compression, more competition from flat fee planners, and continued evolution in compensation models.
- Both sides acknowledge value in matching fee model to personal behavior and financial psychology.
Notable Quotes
- Scott: "Good financial planning can be valuable and that does not change whether AUM fees or flat fees are better." (63:40)
- Ryan: "At the end of the day, people need to work with someone who they trust and who they see themselves working with in a multi-decade experience." (60:20)
- Mindy: "If you're logical, great. Listen to Scott do his thing. If you're more Mindy-esque... maybe the AUM model is the one for you." (67:24)
Key Takeaways (By Timestamp)
- (06:24–09:26): The pillars of financial planning: diagnosis, roadmap, coaching, and investing.
- (14:25): Commissions represent the largest conflict of interest according to Ryan; flat fee and AUM models have tradeoffs, but commissions are most dangerous.
- (22:36–25:55): AUM fees can feel less “real” to clients than writing a check, impacting client engagement and perceived value.
- (29:38–34:47): Flat fee clients often fail to renew and may not stick to the plan, while AUM clients remain accountable—but at higher long-term expense.
- (39:47–46:35): AUM advisors potentially face subtle conflicts, but Ryan emphasizes that personalized, long-term value trumps short-term gains.
- (57:23–58:28): Fee compression is real; the landscape is rapidly changing as flat fee planners proliferate.
- (67:24): The psychological impact of fee structure is real and may dictate the “right” model for a given client.
- (69:16): Both good and bad financial planners exist in every fee model—critical skill is interviewing and selecting for quality, not just cost.
Final Thoughts
The hosts and guest model an honest, rigorous debate and ultimately agree that no compensation model is perfect or universally superior—tradeoffs exist. Fee structure should align with client needs, preferences, and financial psychology. The industry is evolving, transparency is critical, and clients must remain vigilant about what they are paying for and why.
Resources & Contact
- Ryan Sterling: LinkedIn, NerdWallet Wealth Partners
- BiggerPockets Money: Podcast Library, Email: mindy@biggerpocketsmoney.com, scott@biggerpocketsmoney.com
(Note: All advertisements, intros, and outros skipped. All timestamps are approximate and for reference to the original provided transcript.)