Two common fee models, one plain-English comparison, and the questions worth asking.
How AUM pricing works
Under an assets-under-management model, the advisor charges a percentage of the portfolio they manage. The model can align well when the primary service is ongoing portfolio management.
How flat-fee pricing works
A flat-fee planner charges a stated project or ongoing amount for an agreed planning scope. The fee may reflect complexity, but it does not automatically rise because markets rose.
Neither model is automatically better
Compare the annual dollars, the actual work, the communication rhythm, and any incentives created by custody, products, or referrals.
Use the model that matches the work
A useful fee is one you understand before signing, can compare in real dollars, and would still consider reasonable if markets rose, fell, or stayed flat.