and at various tiers, you get a break on AUM fees. Especially when you're talking with individuals worth millions of dollars open to invest, plenty of folks negotiated and got various calculation methods and other discounts.
problem with hourly and commission is that your incentivized to make trades and generate account activity. Makes it look like you're doing something whether you are or not and on a 50-50 call, even an ethical person will take the gamble every time because they make money making a change. AUM fees means the firm is incentivized to maximize the account value since they'll earn more money. If they do a terrible job, you pay them less as the account goes down. incentives aligned.
The other thing that I've seen some firms do is they won't actually OWN any of your money. They'll send it to a 3rd party custodian and have you give them power of attorney over that one account. They do all the work and someone else can verify that no one is pulling a Bernie madoff on you. Hard to do that model without AUM.