Fee Models Explained: How Advisors Get Paid and What It Means for You

Choosing a financial advisor isn’t just about their experience — it’s also about understanding how they get paid. The way an advisor earns money can directly influence the advice they give you, which makes this one of the most important things to clarify before you hire them.

Whether you’re an athlete earning NIL income or a parent helping your student-athlete manage new opportunities, knowing the differences between fee models will help you find the right fit and avoid unpleasant surprises.

1. Assets Under Management (AUM%)

How it works:
You pay a percentage of the money the advisor manages for you — typically between 0.25% and 1.00% per year. For example, if your advisor charges 1% and manages $200,000, you’d pay $2,000 annually, usually in quarterly installments taken directly from your account.

Pros:

  • Your advisor’s pay grows as your investments grow — interests are aligned.

  • Ongoing portfolio monitoring and adjustments.

  • Often includes financial planning services.

Cons:

  • If you have little or no investable assets yet, this model can be costly or unavailable.

  • May incentivize keeping money invested rather than using it for other goals (like paying off debt).

Best for:
Athletes with significant NIL earnings to invest and who want ongoing portfolio management.

2. Flat Fees

How it works:
You pay a fixed amount — monthly, quarterly, or annually — for specific services. This could be $1,000–$10,000 per year depending on complexity.

Pros:

  • Transparent and predictable cost.

  • Advisor isn’t incentivized to sell products or push for more invested assets.

  • Can be more affordable for high earners without large investment portfolios.

Cons:

  • May feel expensive if you don’t use the advisor frequently.

  • Scope of services can be limited — always clarify what’s included.

Best for:
Athletes wanting ongoing advice without tying fees to investment balances.

3. Hourly Fees

How it works:
You pay for the time spent working with you — often $150–$500 per hour. You might hire an advisor for a one-time budgeting session, tax planning, or NIL deal analysis.

Pros:

  • Pay only for what you need.

  • Great for targeted questions or short-term projects.

Cons:

  • No ongoing monitoring or accountability unless you keep booking hours.

  • Costs can add up if you need frequent advice.

Best for:
Athletes who want specific financial questions answered without a long-term commitment.

4. Commission-Based

How it works:
The advisor earns money when you buy a product they sell — such as insurance, annuities, or certain investments.

Pros:

  • May cost less upfront for planning services.

  • Good if you need specific financial products and know what you want.

Cons:

  • Potential conflict of interest — the advisor is paid more for certain products.

  • Less focus on comprehensive planning.

Best for:
Athletes who primarily need a specific product (like disability insurance) but should still seek transparency on alternatives.

5. Hybrid Models

How it works:
A mix of AUM%, flat fee, and/or commission. Many advisors operate this way, tailoring their compensation to the services provided.

Pros:

  • Flexible for clients with multiple needs.

  • Can combine ongoing investment management with product-based solutions.

Cons:

  • Can be harder to track total costs.

  • Still carries potential conflicts depending on the mix.

Best for:
Athletes with diverse financial needs who want one advisor to handle multiple aspects of their plan.

Questions to Ask About Fees in Your First Meeting

  • How are you compensated?

  • What’s my total expected cost in dollars, not just percentages?

  • Do you earn commissions on any products you recommend?

  • Are you a fiduciary at all times?

  • Can you provide a written breakdown of all fees?

The Bottom Line

The right fee model depends on your NIL earnings, financial complexity, and how much ongoing support you want. The most important thing is to understand exactly how your advisor gets paid and how that may affect the advice you receive.

When in doubt, compare multiple advisors, ask for full transparency, and use the NIL Financial Advisor Directory to find professionals who will clearly explain their fees before you commit.