High-net-worth clients often outgrow AUM advisors after a liquidity event because their needs change faster than their advisor’s work does. After a business sale, an IPO, or a large option exercise, the hard questions move away from which funds to own and toward taxes, estate planning, and how to structure the proceeds. An assets-under-management fee keeps rising with the balance, whether or not your advisor takes on that work.
The math is easy to check. On a $10 million account, a 1% fee is $100,000 a year. Most firms step the rate down at higher balances, but even at 0.50% you would pay $50,000 every year, before anyone has run your tax projection. Treat both figures as illustrations, since your own fee schedule will differ.
Why do clients leave advisors?
Wealthy clients usually leave when the relationship stops keeping up with their lives. In PwC’s 2022 survey of high-net-worth investors, 46% planned to change wealth management providers or add a new relationship within 12 to 24 months, and 39% had already switched or added one in the prior three years.
The other reasons are familiar: generic communication, fees that are hard to see, disappointing performance, and trust that wears thin over time. A liquidity event tests all of them in the same year. You have more money and more decisions with deadlines, and the fee is suddenly much easier to see.
Where does the AUM model misalign after a liquidity event?
An AUM fee pays the advisor more when more money stays in the managed account. The SEC’s own Form CRS instructions suggest that an adviser charging an asset-based fee disclose that “the more assets there are in a retail investor’s advisory account, the more a retail investor will pay in fees, and the firm may therefore have an incentive to encourage the retail investor to increase the assets in his or her account.”
Turning a business or a block of stock into cash creates a conflict of cash. Many sensible moves after a sale take money out of the account: paying off a mortgage, funding a donor-advised fund, gifting to your heirs, or buying a private investment the firm does not hold. Each one shrinks the fee base. A good advisor will recommend them anyway, but the fee pays more if the money stays put.
At this stage, you should expect an advisor to cover far more than the portfolio, including:
- A tax projection for the sale year, with estimated payments scheduled
- An estate and gifting strategy, since estate planning after a business sale is easy to postpone while the tax bill gets the attention
- Charitable planning timed to the high-income year
- A cash-flow plan and a liquidity reserve sized to the tax bill and your spending
- A plan for any concentrated position you still hold
- Coordination with your CPA and estate attorney
If you are still working through the sale itself, this tax and cash checklist for a liquidity event covers the first steps, and the guide to managing a windfall covers the first year.
When does the AUM model stop working?
The clearest warning sign is a fee that went up with your deposit while the service stayed the same. Other signs to check:
- No one has run a tax projection for the year of the sale.
- Your advisor pushes to keep every dollar under management, even money meant for debt payoff or gifts.
- Estate and charitable questions get handed to “your attorney” with no follow-up, or never come up.
- Your CPA and your advisor have never spoken.
A percentage fee has structural limits after a large sale, too. Because it tracks your balance rather than the work being done, the bill grows even in a year when little changes in the portfolio. The cost also compounds against your returns. The SEC’s investor bulletin on fees charts $100,000 growing at 4% a year for 20 years under 0.25%, 0.50% and 1% annual fees; the 1% portfolio finishes nearly $30,000 behind the 0.25% one. Cash set aside for a tax payment may be billed at the same rate as money being actively managed. Nino’s guide to what a financial advisor costs breaks down the common fee structures, and the AUM vs flat-fee calculator runs the comparison on your own balance.
Hold your advisor to the standard of tax-aware portfolio management. That means tax-loss harvesting, asset location across taxable and tax-advantaged accounts, and a plan for unwinding a concentrated position over time. After a large gain, where each holding sits and when you sell it can affect your after-tax result as much as what you own. A model portfolio alone does not meet that bar.
When should you keep an AUM advisor after a liquidity event?
An AUM advisor can still be the right choice. Staying makes sense when the firm already provides integrated tax and estate work inside the fee, when you have negotiated a meaningful breakpoint for the new balance, and when you want to hand off investment decisions entirely.
Before you decide, put these questions to your current advisor:
- What will I pay this year, in dollars?
- Which services are included, and which are billed separately?
- Are you acting as a fiduciary at all times on my accounts?
- Who prepares my tax return?
- How do you get paid if I move money out to pay down debt or fund a trust?
Get the answers in writing, then check them against the firm’s Form ADV Part 2A and Form CRS, both available through the SEC’s Investment Adviser Public Disclosure search. Those filings describe the firm’s fees and conflicts in its own words. Labels can blur the picture, and Nino’s explainer on fee-only vs. fee-based advisors shows what each one does and does not tell you.
What advisor model is better suited after a major liquidity event?
For most households after a sale, a fee-only planning team on a flat or retainer fee, with tax and planning under one roof, fits better than a percentage of assets. The cost stays tied to the work while the balance grows.
| Model | How it’s paid | What’s usually included | Who it fits |
|---|---|---|---|
| AUM advisor | Percentage of managed assets | Portfolio management, with planning that varies by firm | Clients who want full delegation and get tax and estate work inside the fee |
| Flat or retainer fee | Fixed annual fee | Planning across tax, estate, investments, and cash flow | Post-sale households whose planning needs grew faster than their portfolio |
| Hourly or project-based | Per hour or per engagement | A defined piece of work | Clients who want a one-time review or second opinion |
| Multi-family office | Varies, often asset-based or a negotiated retainer | Investments, tax, estate, family governance, administration | Families with far higher net worth, often across generations |
The job split matters as much as the fee. A CPA files your return and handles compliance. A CFP builds the plan. After a liquidity event, the piece that usually fails is the coordination between them: the projection that decides how much to reserve, when to pay it, and whether to give or sell before December. When the two work separately, each tends to assume the other has it covered. That gap is the main reason to consider a financial advisor with tax filing included.
Leaving the AUM model does not mean managing the money alone. You can hold low-cost funds at a major custodian and keep investment management separate, while a flat-fee financial advisor helps you decide allocation, location, and timing. Published flat-fee options are compared in the best flat-fee financial advisors.
Lower your wealth management fees with Nino
Nino pairs AI-powered planning software with a dedicated CFP and CPA. With an advisor on your side, the sale-year tax projection, your estate and gifting plan, and your investment strategy come from one view of your household, for a flat annual fee that does not rise with your balance. Nino does not hold, manage, or trade your investments and does not charge a percentage of assets; your accounts stay at your brokerage.
Book a free consultation to have your post-sale plan reviewed before your fee resets on the new balance. Every Advisor plan includes a 30-day money-back guarantee; see plans and pricing.
