By the end of this article you will be able to name which of four ways an advisor is paid, convert that structure into dollars for your own balance, ask six questions that surface a conflict, verify the answers in public filings, and — if you ever want to — move your accounts without permission or a conversation.
This is a set of tools, not a recommendation. Some physicians are well served by ongoing advice, some by a few hours at transitions, and some by neither. Which one you are depends on facts about your situation that this article cannot see. What it can do is make sure that whichever you choose, you chose it knowing the price, the standard of care, and how to check both.
If you already work with an advisor. This material is written to be as useful to you as to anyone shopping. Knowing your fee structure in dollars, the standard of care your advisor operates under, and how to read a Form ADV does not mean you should leave — it means your next review is a better conversation. The physicians who get the most out of professional advice tend to be the ones who can say precisely what they are buying.
Physicians are an explicitly marketed-to segment: high income, late start, limited free time, and little formal financial training. That combination is why the questions below are worth asking of anyone, regardless of their model.
What an advisor actually charges: four fee models decoded
Every advisor relationship has one of four economic engines underneath the friendly meetings. Know which one yours runs on.
1. Assets under management (AUM). The advisor charges a percentage — typically 1%, sometimes scaling down at higher balances — of everything they manage, every year, forever. On a $500,000 portfolio that is $5,000 per year; on $3 million it is $30,000 per year for what is often the same work. The fee is deducted from the accounts, never invoiced, which is exactly why most clients cannot say what they paid last year.
2. Commissions. The advisor is paid by product manufacturers — insurance companies and fund companies — when you buy what they sell. Nothing is invoiced to you, which is why this model is often described as free advice; the compensation is embedded in the product's cost. Commissions on whole life insurance commonly approach or exceed the first full year of premium (LIMRA/NAIC life insurance distribution compensation data), which is a structural reason permanent life insurance appears early and often in commission-based plans. That is a prediction about incentives, not a claim about any individual advisor.
3. Flat fee or retainer. A stated annual price — commonly $5,000 to $15,000 for full ongoing planning — independent of portfolio size. The price is visible, invoiced, and does not grow just because your savings did.
4. Hourly or project-based. $200 to $500 per hour, or $2,000 to $7,500 for a one-time full financial plan you implement yourself. For a physician with a straightforward situation, a few hours at key transitions may be all the professional advice ever actually required.
Key insight
The fee model is not a billing detail — it is the advice. An AUM advisor has a structural reason to oppose paying off your mortgage, funding a 457(b) they cannot manage, or any choice that moves dollars outside the managed accounts. A commission advisor has a structural reason to lead with insurance. The flat-fee advisor's incentives are merely neutral, which turns out to be a high bar.
Converting any fee structure into dollars
A percentage is not a price until you convert it. The number that matters is what the structure costs in dollars — this year, and at the balance you expect to have later, because two of the four structures grow with your savings and two do not.
Example calculation
The same service, priced four ways. A physician with a $900,000 portfolio today, contributing $60,000 a year, comparing offers.
| Structure | Year one | At a $2M balance |
|---|---|---|
| AUM at 1.00% | $9,000 | $20,000 |
| AUM at 0.50% | $4,500 | $10,000 |
| Flat fee, $8,000/yr | $8,000 | $8,000 |
| Hourly, 12 hrs at $300 | $3,600 | $3,600 |
The percentage structures roughly double as the balance does; the flat and hourly structures do not move. Whether that difference is worth it depends on what the advisor does at the higher balance that they did not do at the lower one — which is a fair question to ask them directly, and one a good advisor will have a real answer to.
Advice can be worth a percentage. Preventing one panic sale in a 30% drawdown, catching a error before it compounds for a decade, or structuring a practice buy-in correctly can each be worth more than several years of any of these fees. The figures above do not tell you whether to pay them. They tell you what you are being asked to pay, which is the input you need to judge the rest.
Fiduciary versus suitability, in plain language
These two words decide whose interests legally come first, and the industry profits from how rarely clients ask.
A fiduciary is legally required to act in your best interest — to recommend what is best for you even when something else pays them more. Registered investment advisers (RIAs) owe this duty under the Investment Advisers Act when giving investment advice.
A suitability-type standard requires only that a recommendation be defensible for someone in your circumstances. A whole life policy can be "suitable" for a high-income 34-year-old even when a term policy plus a maxed would leave the same physician hundreds of thousands of dollars better off. Suitable is not best. Broker-dealer representatives and insurance agents have historically operated under this lower standard, and many advisors are dually registered — fiduciary when wearing one hat, salesperson when wearing the other, often within the same meeting.
The standard that applies to retirement-account advice changed again in 2026. On March 20, 2026 the Department of Labor published a notice implementing a court vacatur of the 2024 Retirement Security Rule, and effective April 20, 2026 the 1975 five-part test is once again the operative definition of an investment-advice fiduciary under ERISA. Under that test, a professional is an ERISA fiduciary only if they provide investment advice on a regular, ongoing basis under a mutual understanding that it will serve as a primary basis for decisions — which is why a one-time recommendation, such as a single 401(k)-to-IRA rollover, can fall outside ERISA's fiduciary umbrella.
One qualification that materially changes the picture: PTE 2020-02 remains in effect, republished in its original 2020 operative text (its preamble was removed). Where an advisor is a fiduciary and relies on that exemption to receive conflicted compensation, it carries its own conditions — including acknowledging fiduciary status in writing and documenting the basis for a rollover recommendation. So "not covered by the 2024 rule" is not the same as "no obligations attach."
Source: Retirement Security Rule: Definition of an Investment Advice Fiduciary — Notice of Court Vacatur, 91 Fed. Reg. (Mar. 20, 2026), federalregister.gov/documents/2026/03/20/2026-05492. Verified 2026-08-15.
The protective move is simple: get it in writing. Ask the advisor to state, in writing, that they act as a fiduciary 100% of the time, on all accounts, for all recommendations including insurance. A genuine fiduciary signs without hesitation. A dually registered advisor will produce a paragraph of qualifications — which is itself your answer.
The exact questions to ask, and the answers that should end the meeting
Bring these to any introductory meeting. The questions are short; the evasions are diagnostic.
- "How are you compensated, in total, from all sources, if I become a client?" The only acceptable answer is a complete one: every fee, every commission, every revenue-sharing arrangement. "Don't worry, you never pay me directly" means the products pay them, which means you pay them more.
- "Are you a fiduciary on every account and every recommendation, all the time? Will you put that in writing?" Anything other than yes-and-yes is a no.
- "What will I pay you, in dollars, in year one — and what would that number look like in year ten if my portfolio reaches $2 million?" AUM advisors rarely volunteer the year-ten figure. Make them compute it in front of you.
- "What is your investment philosophy?" You are listening for low-cost, diversified, evidence-based, tax-aware. You are screening out market timing, in-house funds, proprietary products, and anything described as exclusive.
- "Do you sell insurance or earn referral fees from anyone who does?" Insurance need is real for physicians — term life and disability — but it should be analyzed by someone with no commission riding on the answer.
- "Who is your typical client, and how many physicians do you work with?" You want fluency in interplay, backdoor Roth mechanics, plans, and compensation — not a generalist learning on your retainer.
Verify independently before signing anything: look up the advisor's Form ADV and disciplinary history on the SEC's Investment Adviser Public Disclosure site and FINRA BrokerCheck. Ten minutes of reading the actual filings tells you more than two hours of rapport.
Red flags, ranked by how fast you should leave
Leave immediately:
- The first or second meeting includes a whole life, indexed universal life, or variable annuity illustration. For a physician still holding unfilled 401(k), , and backdoor Roth space, permanent life insurance as a "tax strategy" is a commission event, not a plan.
- They will not disclose total compensation in writing.
- "Free" planning from someone compensated entirely by product sales.
- Any pressure tied to a deadline — real financial planning has almost no genuine deadlines that arrive in a sales meeting.
Serious concern, proceed only with explanations:
- AUM-only pricing offered to a high saver with a simple portfolio. If your strategy is index funds and maxed , ask precisely what the percentage buys that a flat fee would not.
- Recommendations that keep money inside managed accounts when obvious alternatives exist outside them — declining to recommend your employer's 457(b), discouraging extra mortgage payments, or suggesting a 401(k) rollover into managed assets without a real comparison of the options.
- Vague performance talk ("we beat the market for our clients") without methodology or benchmarks.
- They cannot explain the pro-rata rule when you mention a backdoor Roth. Physician-specific competence is testable; test it.
Yellow flags worth probing:
- Credentials you do not recognize. CFP and CFA are substantive; many other letter combinations are weekend courses. Ask what each one required.
- A planning process that produces a beautiful 60-page PDF and no specific, dated action items.
What complexity actually justifies ongoing advice
A physician with W2 income, employer retirement plans, federal student loans on a clear PSLF-or-refinance path, and index-fund investments has a financial situation that is — uncomfortable as it sounds — simple. High numbers, simple structure. The strategy fits on an index card: max the $24,500 deferral, fund the HSA, execute the backdoor Roth, buy term life and own-occupation disability, invest the surplus in diversified low-cost funds, repeat for 25 years.
For that physician, ongoing percentage-of-assets management is paying $10,000 to $30,000 per year for someone to not change anything, and the honest alternative is a few hours of flat-fee or hourly advice at genuine transition points: the first attending contract, marriage or divorce, a practice buy-in, an inheritance, the retirement glide path.
Complexity, not income, is what justifies ongoing advice. Real triggers include: practice ownership and its retirement-plan design space, significant alongside W2, multi-state tax exposure, equity or deferred compensation, a special-needs dependent, blended-family estate questions, or — legitimately — a household that knows itself well enough to know it will not execute without accountability. Behavioral value is real value; just price it honestly against what a flat-fee arrangement charges for the same accountability.
Quick takeaway
Evaluate advice the way you would evaluate any professional engagement: for defined expertise, at a price you can state in dollars, with every compensation source disclosed. The question to be able to answer — in either direction — is what the advisor does for the fee, stated in a sentence that would survive your own peer review.
Common questions
Is 1% AUM ever worth it for a physician?
It can be — early on, for complex situations, or for households that genuinely will not stay invested through a crash without a professional in the loop. The test is whether the value is specific and nameable (tax-saving structures implemented, errors prevented, behavior actually changed) and whether the same value is available at a flat fee. At $500,000 of assets the question is debatable. At $3 million, 1% is $30,000 a year and the burden of proof is on the advisor.
What is the difference between fee-only and fee-based?
The single most useful vocabulary distinction in the industry. Fee-only advisors are paid solely by clients — no commissions, ever. Fee-based means fees plus commissions, and the term was coined to be confused with fee-only. When screening, the phrase you want is fee-only fiduciary.
My hospital offers free financial planning sessions. Catch?
Sometimes none — some employers genuinely pay independent planners as a benefit. Some programs marketed through hospitals, residencies, and medical associations are independent planners paid by the employer as a benefit; others are distribution channels for insurance or AUM products. The two are not distinguishable from the invitation, which is why the same two questions apply. Apply the same two questions: total compensation in writing, fiduciary in writing. Free that fails those tests is the most expensive kind.
How do I leave an advisor I already have?
You do not need their permission or a confrontation. Open accounts at a custodian of your choice, request an in-kind ACATS transfer (your holdings move without being sold), and the old relationship ends administratively. Before transferring, check for proprietary funds that cannot transfer and may force taxable sales, and review any surrender charges on insurance products.
What should a one-time financial plan cost?
Full project-based plans from fee-only planners commonly run $2,000 to $7,500 depending on complexity, with hourly work at roughly $200 to $500. For a physician at a transition point, that one-time price frequently delivers most of the value an AUM relationship would, at about one percent of the 30-year cost.
What to do next
- If you have an advisor: find the fee schedule in your agreement and your latest Form ADV Part 2, and convert the structure into this year's dollars. You are looking for what you are paying going forward, and whether you can state it without checking.
- Compare that figure against what the other three structures would cost for the same service.
- If you are shopping: interview at least two fee-only fiduciaries, bring the six questions above, and read each advisor's Form ADV Part 2 before any second meeting.
- If you are leaving: list your holdings, flag anything proprietary or surrender-charged, and initiate an in-kind transfer.
- If you are going without: calendar an annual self-review — contribution limits, insurance coverage, beneficiaries, rebalancing — and buy hourly advice when life actually changes.
If you are meeting an advisor soon, bring the six questions and the fee figures you calculated. A physician who arrives knowing what they pay and what standard applies is a better client, and a good advisor will welcome the conversation.
Keep going: the interactive Compounding on a Physician Timeline module walks the core decision step by step. This is education, not individualized financial advice.