Financial Advisor Adam Grossman: The One Fee Structure That Saves Wealthy Investors Thousands

Adam Grossman, the Boston-based financial advisor who founded Mayport, sat down with Christine Benz on Morningstar’s The Long View and challenged the way most Americans pay for investment advice. His argument: the standard 1% of assets under management fee is an industry habit maintained for decades, untethered from the actual cost of the work.

“There isn’t a whole lot of difference, in my opinion, in managing a portfolio that has, say, $2 million versus a portfolio that’s $3 or $5 or even $10 million.” If Grossman is correct, a wealthy investor paying a percentage of assets funds work that does not exist.

The stakes are concrete. A 1% AUM fee on a $5 million portfolio is $50,000 a year. On a $10 million portfolio it is $100,000 a year. A flat-fee advisor typically charges between $8,000 and $15,000 annually. The difference is real money that either stays in the account or leaves.

The math is not subtle

The AUM model made sense in 1975, when advisors picked individual stocks, rebalanced by hand, and earned commissions on every trade. It makes far less sense in 2026, when most advisors build portfolios from low-cost index funds and rebalance with software.

“If an accountant looked at someone’s income and saw that their income had gone up and then tried to increase their fee proportionally, then they probably wouldn’t get away with it. But the investment industry does get away with it.” An accountant filing a return for a household earning $300,000 does not charge ten times what they charge a household earning $30,000. Investment management scales similarly.

Consider a hypothetical retiree with a $4 million portfolio. Under a 1% AUM model, the annual fee is $40,000. Under a $10,000 flat fee, the saving is $30,000 a year. Reinvested at a 6% real return, that yearly $30,000 difference compounds into roughly $1.1 million over twenty years.

The drag worsens for investors who hit a liquidity event. Grossman described a client who sold his company and watched his advisory fee jump overnight simply because the account balance grew. The work did not change. The bill did.

Grossman also abandoned active stock-picking after auditing his own research. His findings on equity research were “pretty consistent with what all the data has found, which is you win some, you lose some. But after fees and after taxes especially, I didn’t find it a productive use of time.” Pair that with the fee critique and the picture sharpens: the wealthy investor often pays a premium price for a service that adds no premium return.

The break point: account size

Flat fees do not help every investor. A $400,000 portfolio at 1% pays $4,000 a year, which is less than most flat-fee advisors charge. At that level, AUM is cheaper.

The math flips somewhere between $750,000 and $1.5 million, depending on the flat fee quoted. Above $2 million, the AUM model becomes a wealth tax on success. This is why Grossman noted his practice has ended up working almost exclusively with clients in or near retirement: those are the households where flat fees produce the largest savings.

Benz raised a fairness counter: what about clients who demand more hours? Grossman’s response was that the same imbalance already exists in AUM pricing, where “two people might have, say, million-dollar portfolios, so they’re paying the same fee, but one has more going on in their life than another.” He argues needs “ebb and flow over time” and average out across a client base.

What to do this week

1. Pull your most recent advisory statement and find the exact dollar amount you paid in fees last year. Most investors have never looked.
2. Divide that dollar amount by the hours of actual advisor contact you received. If your effective hourly rate exceeds what you would pay a top tax attorney, you have a fee problem.
3. Request flat-fee quotes from at least three fiduciary advisors. The National Association of Personal Financial Advisors maintains a searchable directory of fee-only planners.
4. Compare the flat-fee quote to your current AUM bill. If the gap exceeds $15,000 a year, the burden of proof shifts to your current advisor to justify the premium.

The fee structure you pay is one of the few investment variables fully within your control. Grossman’s point is simply that wealthy investors have been trained not to notice.