Robo-advisors charge 0.30% for what you charge 1%. The math is not in your favor.

Updated April 12, 2026

What's happening

Global robo-advisor AUM reached $1.97 trillion in 2025. Vanguard’s advisory platform alone manages $312 billion, charging 0.30% — less than one-third of the industry-standard 1% AUM fee. Schwab Intelligent Portfolios manages $81 billion. Wealthfront: $75 billion. All offer automated rebalancing, tax-loss harvesting, and portfolio construction that used to require a human advisor.

The compression is not limited to small accounts. Cerulli Associates reports 83% of advisors will charge less than 1% for $5M+ clients by 2026. Direct indexing AUM reached $860 billion by year-end 2024, growing 12.3% annually — faster than ETFs, mutual funds, or SMAs. Direct indexing portfolios harvest 3.8x more tax losses than ETF-only portfolios. The features that justified the 1% fee are becoming table stakes at a quarter of the price.

This is not a technology adoption question. It is a pricing model question. The firms that continue to bundle portfolio management with planning and advisory under a single AUM fee are watching the most visible part of that bundle get repriced by software. The planning and judgment were always the real value — but they were never separately priced, so clients never saw them as separate services.

Why the obvious responses don't work

“Move upmarket to larger accounts”

Larger accounts face the same fee pressure. A client with $5 million is even more aware that 1% means $50,000 per year for portfolio management that software handles for $15,000. The math gets worse as accounts get bigger.

“Add more services to justify the fee”

Adding services under the same AUM fee makes the bundle bigger but does not change the pricing problem. Clients still see one number — 1% of assets — and compare it to what a robo-advisor charges. The additional services are invisible inside the bundle.

“Cut fees to match”

You cannot profitably deliver human advisory at robo-advisor pricing. Cutting to 0.50% halves your revenue per client while your costs — compliance, staff, office, technology — stay roughly the same. It is a race to a margin you cannot sustain.

What's working instead

Unbundling works. Separate portfolio management from planning and advisory. Price each independently. Let clients choose. Portfolio management becomes a low-margin utility. Tax-aware planning, business owner transitions, and estate strategy become premium standalone offerings with fixed fees or retainers. Total revenue per client often increases because the advisory was always worth more than what was embedded in the 1% bundle.

The pattern is the same across every firm that gets this right: they stop optimizing the old model and build new offerings around what AI cannot do. That is the work we do in the Workshop.