When it comes to personal financial planning, the industry is starting to move towards fixed/flat fee compensation, which is a welcome development for doctors and dentists who are high earners and high net worth (though not necessarily at the same time). When charged for personal financial planning services, asset-based fees are highly unfair towards those with asset levels in excess of $1M and AUM fees can be even more costly for those with retirement plans because many doctors and dentists will accumulate anywhere between $1 and $4 million inside their retirement plans.

Unfortunately, the retirement plan industry has not followed suit and even though the fees are coming down on average, the cost to plan sponsors (and especially for smaller retirement plans) is still significant.  Depending on what study one looks at, it is not uncommon to pay total AUM fees of as much as 2%, though the average is probably closer to 1%.  However, for plans with $1M or more in assets, this means paying a large fee that increases every year, which is especially true for a group practice plan with multiple partners. Even for a solo practice with over $1M in assets, paying $10k a year for little or no service relative to the cost is not something one wants to do.  Many advisers serving the small plans market are rarely acting in an ERISA fiduciary capacity or have experienced managing retirement plans, so paying such high fees is never a good idea, especially for a smaller plan.  Larger plans might have smaller AUM fees, but because total assets are often in the tens of millions, the total cost to the plan can be staggering over time.  Because most of the money in small practice plans belongs to the owners, they pay the bulk of the fees, and if your plan has AUM fees, you can potentially save a lot of money if you calculate what you are paying in fees, and determine whether you can make changes to the plan to minimize or eliminate completely all AUM fees in favor of fixed/flat fees.

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