As I am considering for the first time ever hiring someone to advise me on my securities investments I encountered this issue. To me this means the typical 1% AUM many if not most financial advisors seek actually costs much more on an after tax basis.
For example, say an advisor delivers a 10% gross return on one's portfolio. That means one pays regular rate income tax on 10% after receiving only 9%. Paying income tax in the top bracket of 37% federal tax, brings that AUM from 1% to 1.4%, + or - .
Apparently the amounts paid to a fee-only advisor are likewise nondeductible. Yuk!
Are Your Financial Advisor Fees Tax Deductible? | Bankrate.