Paying 1% May Cost More Than You Think, Advisor Says

When Kyle Ray sat on the client side of the table, the math didn’t sit right.

Managing significant personal assets, he realized that traditional financial advisory fees—often based on a percentage of assets under management—could quietly cost tens of thousands of dollars a year. Over time, those fees didn’t just add up—they compounded.

That realization became the foundation for Ridgeback Wealth Management.

“I had been an advisor client,” Ray said. “And I kept coming back to the same question—does it really cost more to manage more money?”

For Ray, the answer was no. It doesn’t cost meaningfully more to manage $1 million than $500,000—or $5 million than $1 million—yet clients are charged as if it does, allowing firms to capture economies of scale that should belong to the investor.

 And that answer led him to build a different model.

A different way to pay for advice

Most traditional advisors charge what’s known as an assets-under-management (AUM) fee—typically around 1% annually. That means the more money a client has invested, the more they pay, regardless of how much additional work is involved.

Ridgeback takes a different approach: a flat annual fee.

Currently set at $5,800 for full wealth management, the model is designed to separate the advisor’s compensation from the size of the client’s portfolio.

“This isn’t a discount,” Ray said. “It’s a flat fee. I’m charging for the work, not for how large your account happens to be.”

That distinction matters—especially over time.

How fees quietly reshape wealth

Using a example provided by Ridgeback, a $2 million portfolio earning a hypothetical 7% annual return assumption over 20 years produces dramatically different outcomes depending on how fees are structured.

Under a 0.85% Accounts Under Management fee:

• Total fees paid in 20 years: $631,473
• Portfolio value after 20 years: $6.52 million

Under Ridgeback’s flat fee model:

• Total fees paid in 20 years: $155,848 (includes possible 3% annual inflation)
• Portfolio value after 20 years: $7.42 million

The difference: nearly $900,000 in additional wealth for the client. 

“That’s not just fees you’re saving,” Ray said. “That’s growth you’re keeping. Every dollar not paid in fees continues compounding for you.”

Even at lower starting points, the gap remains meaningful. A $1 million portfolio, under the same assumptions, results in more than $287,000 in additional wealth over 20 years. 

Where the model makes the most sense

Ray is straightforward about where his structure creates the most value.

For households with roughly $500,000 or more in investable assets, the flat fee often begins to undercut traditional AUM pricing. Beyond that level, the savings accelerate quickly.

“At a million dollars, you’re paying about half of what you would at a traditional firm,” he said. “And as the portfolio grows, the difference becomes substantial.”

That structure also removes a built-in tension common in the industry.

“If a client wants to use their money differently—pay off a mortgage, invest in real estate, or hold assets elsewhere—there’s no conflict for me,” Ray said. “My fee doesn’t change based on those decisions.”

Advice beyond the account

The flat fee model also allows Ridgeback to look beyond a single investment account.

Many households hold assets across multiple places—401(k)s, real estate, savings accounts, or legacy investments that aren’t easily transferred.

Under an AUM model, advisors are typically paid only on the assets they directly manage. Under Ridgeback’s approach, all of those pieces can be part of the conversation.

“Virtually no one has all their assets in one place,” Ray said. “The goal is to give advice on the whole picture, not just the portion I manage.”

A different kind of practice

Ridgeback is intentionally built as a smaller, relationship-focused firm.

Ray limits the number of clients he works with, allowing for more direct access—including flexible scheduling that can include evenings or weekends.

“In larger firms, advisors may have hundreds of clients,” he said. “I wanted something more personal—where clients can reach me directly and actually have a relationship.”

From poker tables to financial planning

Before he entered financial planning, Ray accumulated his wealth in an unconventional way: as a professional poker player.

Over time, his focus shifted from earning money to managing it effectively.

That shift led him to pursue a master’s degree in financial planning from the University of Georgia, where he studied under professors who helped shape modern financial planning education.

Today, he brings that analytical background—and a self-described passion for the work—to his practice.

“This is something I genuinely enjoy,” Ray said. “It doesn’t feel like work. And it’s a lot more meaningful to help families build and protect what they’ve earned.”

A focus on what can be controlled

Markets rise and fall. Returns vary.

But one factor, Ray said, is always within a client’s control: the cost of advice.

“No advisor controls the market,” he said. “But fees are one of the few things you can control. And over time, they make a bigger difference than most people realize.”

Hypothetical Illustration:
The examples shown are hypothetical and for illustrative purposes only. They are based on assumptions, including a 7% annual return and specified fee structures, and do not reflect actual client results. Actual outcomes will vary and may differ materially. Returns are not guaranteed, and investors may lose money. Past performance does not guarantee future results.

Fee Assumptions and Comparisons:
The flat fee and AUM fee examples are provided for comparison purposes only. The AUM fee assumes a 0.85% annual charge. The flat fee may be adjusted over time at the advisor’s discretion. Advisory services, scope, and value vary across firms, and this comparison reflects fees only and does not account for differences in services, investment strategies, or client experience.

Tax Considerations:
This illustration does not account for the impact of taxes, which may significantly affect investment outcomes.

General Information:
This material is for informational purposes only and should not be construed as personalized investment advice or a recommendation to adopt any particular strategy.

Firm Disclosure:
Ridgeback Wealth Management, LLC is a Registered Investment Adviser with the State of Georgia. Registration does not imply a certain level of skill or training. Additional information about the firm is available in Form ADV Part 2A, which can be found at adviserinfo.sec.gov.