All-in Annual MFO Cost by AUM Band

Estimate annual multi-family office cost from assets under management, a tiered fee schedule, and fixed operating costs. Use this for planning and comparison. It is educational only.

Method

We apply each fee rate only to the dollars inside its band. We then add the fixed annual cost. The effective rate shows the total annual cost as a percentage of AUM. Compare estimates only when the service scope and operating model are similar.

Formulas

• Band 1 dollars = min(AUM, band 1 limit).
• Band 2 dollars = max(0, min(AUM, band 2 limit) minus band 1 limit).
• Band 3 dollars = max(0, AUM minus band 2 limit).
• Variable fee = band 1 dollars times band 1 rate plus band 2 dollars times band 2 rate plus band 3 dollars times band 3 rate. Rates are converted from percent to decimals.
• All-in annual MFO cost = variable fee plus fixed annual MFO cost.
• Effective rate, percent = all-in annual MFO cost divided by AUM times 100.

Worked example

• Band 1 fee = 100,000,000 times 0.75 percent = 750,000.
• Band 2 fee = 80,000,000 times 0.60 percent = 480,000.
• Band 3 fee = 0.
• Variable fee = 1,230,000.
• All-in annual cost = 1,230,000 plus 250,000 = 1,480,000.
• Effective rate = 1,480,000 divided by 180,000,000 times 100 = 0.8222 percent.

Assumptions

• The three-band fee schedule is an illustrative planning default. Actual MFO pricing may vary by service scope, client complexity, liquidity, and negotiating terms.
• The calculator treats AUM as the fee base and assumes fees are billed annually. It does not model billing frequency, cash flows, performance fees, taxes, or investment expenses.
• The fixed annual cost is a user-entered planning estimate for services and overhead that do not change with AUM.