Millionaire's Guide to Fee-Only Financial Planning

An honest framework for the decisions at hand. Not tax or investment advice — your specifics matter.

The $1M threshold changes the game

• Below $1M, low-cost three-fund portfolios + maxing tax-advantaged accounts is 90% of optimal. Vanguard Personal Advisor at 0.3% serves this well.
• Above $1M, complexity increases non-linearly: asset location, tax-loss harvesting, concentrated stock, estate planning begin to matter more than expense ratios.
• Wirehouse advisors at 1-1.3% AUM still use mutual funds and index funds — you're paying for complexity you aren't getting.

Direct indexing — where the real tax savings live

• At $500K+ in taxable, direct indexing (holding individual stocks that replicate an index) enables tax-loss harvesting on single-name volatility, not just index-level drops.
• Expected tax alpha: 0.5-1.5%/year depending on market volatility and ordinary-income exposure.¹
• On a $2M taxable account, that's $10-30K/year of tax deferral — often worth 2-3× the fee differential alone.
• Wash-sale rule under IRC § 1091 still applies to direct-indexed portfolios — the SMA manager must avoid repurchasing substantially identical securities within 30 days.²

Asset location — free money most investors leave on the table

• Bonds and REITs in tax-deferred (traditional IRA/401k). Stock index funds in taxable. High-growth / international in Roth.
• Optimizing this across a $1-5M multi-account portfolio saves 0.3-0.6%/year — worth $5-30K.
• Wirehouse advisors rarely do this well across client accounts because their portfolio management systems model per-account, not household-wide.

Concentrated stock — diversify without the tax bill

• RSUs, ISO exercises, and inherited positions often leave 20-50% of net worth in one ticker.
• Options: gradual sell-down into low-income years; exchange fund (IRC § 721 partnership — 7-year lockup for tax deferral);³ Charitable Remainder Trust under § 664 for charity + lifetime income + immediate deduction; covered calls for gradual income (watch IRC § 1092 straddle rules).
• Generalist advisor who says "just sell it gradually" is missing the best moves — but a bad exchange fund with high internal fees is worse than gradual selling.

The fee conversation, honestly

• At $2M, fee-only AUM of 0.6-0.8% costs $12-16K/year. Wirehouse 1.1% costs $22K. Fee-only family office flat-fee models ($15-30K/yr flat) don't scale with assets.
• Above $5M, flat-fee is often cheapest. At $1-5M, AUM with a specialist fee-only RIA usually wins.

Sources

1. Kitces — Direct Indexing Tax Alpha research. 0.5-1.5%/yr annualized benefit is the academic consensus.
2. IRC § 1091 — Wash-Sale Rule (30-day rule on substantially identical securities).
3. IRC § 721 — Partnership Contribution (Exchange Fund mechanism); § 664 — CRTs; § 1092 — Straddle Rules.
4. Vanguard Personal Advisor Services fee schedule. 0.30% for up to $5M.
5. SEC — Accredited Investor Standards.

Verified against IRC and industry research as of April 2026.