An advisory fee is the compensation a client pays an investment adviser, most commonly as an annual percentage of assets under management, billed quarterly and usually deducted directly from the account.
A percentage of assets, frequently tiered so that larger balances are charged at lower marginal rates, billed quarterly in advance or in arrears, and deducted from the account with the client's written authorisation.
Flat annual retainers, hourly engagements, and project fees all exist, and they decouple what the client pays from how much they have invested. That removes the conflict inherent in asset-based billing when a client asks about spending a large sum.
They are less common because they are harder to sell and harder to scale, not because they are worse.
Underlying fund expenses, platform or TAMP fees, strategist fees, trading costs, and custodial charges are separate. A client comparing one adviser's headline rate to another's may be comparing different sets of components.
The comparable number is everything the client pays, all in.
Fees must be described in Form ADV Part 2, Item 5, including how they are calculated and what else the client will pay.
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