What actually changes when your adviser charges a fixed fee rather than a percentage of your investments — for the cost, the advice and the relationship.
Many financial advisers charge an annual percentage of the money they manage.
One per cent sounds modest. The pound figure can look rather different.
The fee usually rises and falls with the portfolio. If the investments grow, the adviser's fee grows with them.
That does not automatically make the fee unfair. The question is whether the cost in pounds remains proportionate to the work, complexity and responsibility involved.
A £2,500 fee for a £250,000 portfolio may be entirely reasonable.
A £10,000 fee for a £1 million portfolio deserves a closer look — particularly if the work being done has not materially increased as the portfolio has grown.
The 1% figures above are simple illustrations. Percentage-based adviser fees vary and may be lower or higher.
Investment arrangements usually contain three separate charges.
The amount paid for financial planning, advice, reviews, implementation and ongoing support. This may be a fixed amount or a percentage of the portfolio.
The cost of the administration system used to hold pensions, ISAs and investments. This is normally charged separately from the adviser fee.
The charges inside the funds or portfolios themselves. These apply whether the adviser charges a fixed fee or a percentage.
When comparing advisers, compare like with like.
A fixed adviser fee should be compared with the existing adviser fee, rather than with every cost attached to the portfolio.
Ask for the annual amount in both percentages and pounds:
Neither charging model guarantees good advice.
Both can be fair. Both can become poor value.
The important difference is what causes the price to change.
The adviser receives a percentage of the portfolio being managed.
The fee adjusts automatically and may provide an accessible way to pay for advice on a smaller portfolio.
Does the work involved genuinely increase in proportion to the portfolio?
The adviser agrees a pound fee based on the work, complexity and ongoing responsibility involved.
The fee does not automatically increase simply because markets have risen or more money has been invested.
Does the fixed fee still represent fair value for the work being delivered?
Most advisers are honest, competent and interested in doing the right thing for their clients.
A charging model does not determine whether advice is suitable. Regulation, professionalism and the adviser's judgement all matter.
It is still reasonable to understand how the adviser's income changes when particular decisions are made.
Using £100,000 from an advised portfolio reduces a 1% adviser fee by £1,000 a year. Under a fixed-fee model, the fee would normally be unchanged unless the work became simpler.
A substantial gift removes money from the portfolio and may reduce a percentage-based fee. That does not make gifting correct, but the decision should be judged on affordability, tax, family circumstances and the wider plan — not on where the assets remain.
Using part of a pension to buy an annuity may remove money from the advised portfolio. For some households, guaranteed income may still be the right planning decision.
A retirement plan may show that someone can safely spend more during their healthier years. A good adviser should be comfortable recommending that, even where the portfolio becomes smaller as a result.
Not every pound needs to sit inside an investment portfolio. The right answer may be to retain cash, repay borrowing, invest in a business or buy property. Each decision should be tested against the whole financial plan.
Take someone at 45 with £500,000 invested, adding £2,500 a month, planning to keep going for twenty years.
The investments, the contributions and the planning work are identical under both arrangements. Only the charging method changes.
Adviser fees are deducted from the portfolio under both arrangements. Platform and investment costs are excluded because they are assumed to be the same either way.
Adviser fee charged in each year of the illustration. Copper: 1% of the portfolio. Navy dashed: the fixed fee for this level of complexity, rising with inflation only.
In year one the fixed arrangement is the more expensive of the two — £3,000 of initial planning work plus £3,600 of ongoing fee, against £5,582 under a percentage. That is worth saying plainly, because it is the part most fee comparisons leave out. It also assumes the percentage adviser charges nothing at all to set things up, which is generous to them: an initial charge of 1% to 3% of the amount invested is common, and would add several thousand pounds to their side of the first year.
What changes is the direction of travel. The percentage fee is attached to the portfolio, so as the pot grows the fee grows with it. The fixed fee is attached to the work, so it only moves with inflation. By year twenty it is £21,600 against £5,800 — very nearly four times as much, for the same advice.
The portfolio difference is larger than the fee difference because money not taken in fees stays invested and compounds.
A fixed fee is proportionally more expensive on a smaller portfolio, so somewhere below the example above the two methods swap places. Running the same twenty-year arithmetic at different starting sizes puts that crossover at around £240,000 for someone contributing £500 a month — but nearer £290,000 for someone contributing nothing at all, because without contributions the portfolio grows more slowly and the percentage fee takes longer to catch up.
So there is no single threshold, and anyone who quotes you one is simplifying. What matters is the combination of what you hold, what you are still adding, and how long you expect to keep going. Below the crossover a percentage fee is the cheaper arrangement, and increasingly so the smaller the pot.
The fixed figure used here — £3,600 a year — is the Chapter3 fee for a household of this complexity, not a single price for everybody. A more involved position, with a company, a trust or several arrangements to keep aligned, sits in a higher band and the comparison narrows accordingly. The fee follows the work, which is the whole point of charging this way.
That is the honest shape of it. A percentage fee suits a smaller portfolio that is not growing much. A fixed fee suits a larger one, and suits anyone whose portfolio is expected to grow — because the fee does not grow with it.
The calculator below compares two ways of charging for the same advice, on assumptions you set yourself. It is not a forecast, not a quotation, and not a personal recommendation. It tells you nothing about whether either adviser is any good.
What it assumes. The return you enter is achieved every year, smoothly, and contributions are made as entered throughout. Adviser fees are deducted from the portfolio. The fixed fee rises 2.5% a year; the percentage fee rises and falls with the portfolio. The fixed figure is the Chapter3 fee for a household of this complexity — a more involved position sits in a higher band.
What it excludes. Platform charges, fund costs, tax and withdrawals — all assumed identical under both, so they drop out of the comparison but would reduce both outcomes in real life.
The value of investments can fall as well as rise and you may get back less than you invest. On a smaller portfolio a percentage fee is the cheaper arrangement — set the figures to your own and the tool will say which way round it falls for you.
Everything updates as you type.
Annual adviser fee. Copper: percentage. Navy dashed: fixed.
Assumes 5.5% a year investment growth and a £3,600 fixed fee rising 2.5% a year, matching the worked example above. A more complex household sits in a higher fee band, which narrows the difference. No initial charge is assumed on the percentage side, which flatters it. Illustrative only.
Illustrative calculation only, not a forecast, a quotation or a personal recommendation. Real returns arrive unevenly, contributions change, and tax is not modelled. A lower percentage fee, a higher fixed fee, a smaller portfolio or a shorter period would each reduce the difference — and can reverse it.
A fixed fee is not automatically the cheapest option.
It tends to become particularly relevant where the portfolio has grown faster than the work required to advise on it.
A percentage that looked reasonable at £250,000 may look very different once the portfolio reaches £1 million. The portfolio may have quadrupled, but the amount of work involved may not have.
Business owners and retirement-stage families often need work across:
The portfolio is only one part of that work.
The right advice could involve repaying debt, buying secure income, gifting money, holding cash or using assets elsewhere. A fixed fee allows those choices to be considered without the adviser's income automatically changing.
A fixed pound fee makes it easier to decide whether the ongoing relationship remains worth what it costs.
Fixed-fee planning can support a smaller number of deeper client relationships, where the same adviser remains involved over time.
There are circumstances where a percentage-based fee may be simpler or less expensive.
A fixed fee has to cover a minimum amount of professional time. For a portfolio of around £250,000, with straightforward requirements, a modest percentage fee may produce a lower pound cost than a planning-heavy fixed-fee service.
The comparison becomes less straightforward as the portfolio grows, particularly where the work involved does not grow with it.
Some clients primarily want discretionary investment management, active portfolio construction or a specialist investment mandate. Where the value being purchased is mainly investment management, a percentage of the portfolio may be a logical way to price it.
A percentage-based fee should not be judged by the percentage alone. A lower percentage on a larger portfolio may still represent reasonable value where the work and responsibility justify the pound amount.
Someone with settled finances, no business, little tax complexity and few major decisions ahead may not need a planning-heavy service.
Some people prefer not to receive a separate invoice or fund the fee from income. A percentage-based fee deducted from the investments may feel administratively easier.
Removing the link to portfolio value does not remove the need to demonstrate value.
A good fixed-fee relationship should make the work clear.
A cashflow-based plan connecting the household, business, pensions, investments, tax position and future income.
Allowances, company extraction, pension contributions and account structure considered against the wider plan.
A clear approach to cash reserves, secure income, portfolio withdrawals and how spending may change over time.
Appropriate portfolios, platform oversight, rebalancing and ongoing suitability. Investment management remains important. It is simply not the whole service.
Working alongside accountants, solicitors and tax specialists so that the advice joins up.
Access when circumstances change or a material decision cannot wait until the next formal review.
Documented advice, regulated implementation, record-keeping and periodic review.
Ask for adviser, platform and investment charges to be shown separately.
The adviser should be able to explain the work, meetings, planning, investment oversight and access included.
Ask what happens if:
Will the same adviser attend meetings, write the recommendations and respond when something changes?
Understand whether the cost changes with the assets, inflation, complexity, service or the adviser's wider pricing structure.
A good adviser should be able to explain when their service or charging model would not be the right fit.
Use the latest valuation, adviser agreement and platform statement.
What work, access or responsibility would actually change under the alternative arrangement?
Chapter3 charges fixed fees for the initial planning and the ongoing relationship that follows.
The fee reflects the complexity of the position and the work involved.
It does not automatically increase because markets have risen or more money has been invested.
A one-off fee for building the plan, making the recommendations and putting the agreed structure in place.
A fixed monthly fee based on the planning complexity and the work required during the year.
Most Chapter3 clients currently sit between £300 and £500 per month.
Above that range — multi-entity or intergenerational positions, typically £5m and upwards — the fee is agreed individually rather than taken from a band. Business exits, multiple companies, trusts, complex estate planning and extensive professional coordination all push the work, and therefore the fee, higher.
The exact fee is agreed in writing before any work begins. Platform and investment charges remain separate and are shown clearly.
Fees shown are current at June 2026 and may change. The current website fee page should remain the definitive published schedule.
You do not need to be unhappy with your adviser to ask the question.
Perhaps the portfolio has grown, the business has been sold or the annual percentage now produces a very different pound figure from the one you originally agreed to.
A 30-minute conversation is usually enough to:
If the current arrangement still looks sensible, I will say so.
If the fees, planning or service appear out of line, we can discuss what a different arrangement might look like.
The worked example compares one thing only: the adviser charging method. Everything else is held identical on both sides, so the difference shown is attributable to the fee structure rather than to better investments or better luck.
Two are worth drawing out, because they pull in opposite directions.
Generous to the percentage adviser: no initial charge is assumed. An initial fee of 1% to 3% of the amount invested is common, and including one would widen the difference.
Generous to the fixed fee: £3,600 a year reflects a household of that complexity. A more involved position sits in a higher band, which narrows the difference.
Some percentage-based advisers charge materially less than 1%. Some fixed-fee clients need a fee materially higher than £3,600.
A month-by-month calculation: contributions added monthly, growth applied monthly, the adviser fee deducted at the end of each year. The percentage fee is charged on the portfolio value at that point; the fixed fee rises 2.5% a year regardless of the portfolio.
The chart, the table and the interactive calculator on the website all run from the same calculation, so they cannot disagree with one another.
It is an illustration, not a forecast. Real returns arrive unevenly, contributions change and tax is not modelled.
This guide is general information and does not constitute personal financial advice. Investments can fall as well as rise, and clients may receive back less than they invest. Past performance is not a reliable guide to future returns. Tax treatment depends on individual circumstances and may change.
Chapter3 Financial Planning Ltd is an Appointed Representative of ValidPath Limited. ValidPath Limited is authorised and regulated by the Financial Conduct Authority under FRN 197107. Chapter3 Financial Planning Ltd appears on the FCA Register under reference number 931195. Registered in England, Company No. 12740201. Registered office: 43a Manor Drive, Manchester, M21 7QG.