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How much does a financial advisor cost?

OCTOBER 8, 2020

How much does a financial advisor cost? 

It's not a simple question to answer: how much does a financial advisor cost? The reason it's difficult to determine is because there are so many types of financial advisors, and they all charge differently. Some advisors might only charge you if you make money as a result of their advice, while others might charge you an hourly rate or a flat fee. In this blog post, we'll take a look at the different ways that financial advisors can bill their clients, as well as how to find an affordable advisor who meets your needs.

Financial advisor costs can vary depending on the services they provide and how they charge for those services.

Financial Advisor's Fee Structure

My Momma Told Me: "You Better Shop Around"

When you're looking for a financial advisor, it's important to shop around and compare pricing. Some advisors might charge by the hour, while others will charge a flat fee or a commission. It's important to find an advisor who charges a fee that you're comfortable with and who provides services that meet your needs.

If you're working with an advisor who charges hourly, be sure to ask how they bill for their time. Some advisors will bill in increments of six minutes, while others will bill in increments of fifteen minutes. If you're not sure how your advisor bills, be sure to ask before you begin working with them.

Ask Questions and Look For Transparency

It's also important to ask about other fees that your advisor might charge, such as annual fees, asset management fees, and performance-based fees. These fees can add up, so it's important to understand how much you'll be paying in total before you commit to working with an advisor.

When you're looking for a financial advisor, it's important to find one who is transparent about their pricing and who provides services that meet your needs. By doing your research and asking the right questions, you can find an affordable financial advisor who can help you reach your financial goals.


Indirect Fees

Financial advisor costs can be divided into two general categories: direct and indirect. Direct costs are the fees you pay directly to your financial advisor for their services. These can include hourly consulting fees, asset-based fees, flat fees or commissions. Indirect costs are the costs associated with investments that your financial advisor recommends, such as mutual fund expenses or advisory fees. Indirect costs are usually expressed as a percentage of your assets under management (AUM). Financial advisors may also receive compensation from financial product manufacturers in the form of kickbacks, which are usually disclosed in fine print. This is a typical fee for financial advisor. Overall, financial advisor costs can take a big bite out of your investment returns, so it's important to understand what you're paying before you sign on the dotted line.

Ongoing Relationship?

A top financial advisor cost money, no way around it. If you want an ongoing relationship with a planner, an annual fee or percentage of AUM could be a good fit. It's also important to consider whether you're comfortable with a commission structure. Commissions in and of themselves can be a positive or negative thing, depending on the situation. For example real estate agents make money that way so it's not bad per se but you should always ask your financial planner about any potential conflicts if they're going to promoting financial products! That's why it's wiser to just go the fee based or only route, in my opinion.

What About A Financial Plan?

A financial plan is a document that outlines your financial goals and how you intend to achieve them. A financial plan is a roadmap for your financial future. It is important to have a financial plan in place so that you can make informed decisions about your money and create a roadmap for reaching your financial goals.

Your financial plan should take into account your current financial situation, your short-term and long-term financial goals, and any risk tolerance or investment preferences you may have. It should also consider any major life changes that could impact your finances, such as starting a family or buying a home.

Once you have created your financial plan, it is important to review it regularly and update it as needed to ensure that it remains relevant and realistic. A good financial plan can help you make the most of your money and reach your financial goals.

“There are dreamers and there are planners; the planners make their dreams come true.” - Edwin Louis Cole.

What do I pay for?

Your advisor can give you a better idea of what they are charging for their services when it is clear that there's more than one type in-house. In some cases, financial planning firms might also provide comprehensive support and advice tailored specifically towards your needs as well - but this will depend entirely on the specific company itself! When it comes to financial advisor costs, there is no one size fits all answer.

Is it worth paying a financial advisor?

A financial adviser costs nothing if you hire a good one. In other words, the advice they give you will actually make it where a financial advisor costs nothing but only equates to better investment gains than you could do yourself, a successful financial plan, and goals. Typically, advisor fees clients 1% off each account they manage. However, rates generally drop as much money is invested.

Financial advisor cost can seem daunting, especially if you're not sure what you need or how to find the right person for the job. However, there are a few things you can keep in mind that will help you get the most out of your financial advisor without breaking the bank. First, remember that you don't need to go with the most expensive option. There are plenty of great financial advisors out there who charge reasonable rates. Second, don't be afraid to negotiate. If you feel like you can't afford an advisor's standard rate, see if they're willing to work with you on a lower fee. Finally, make sure you're clear about what you want and need from your financial advisor. The more specific you are, the easier it will be to find an advisor who can meet your needs without charging an arm and a leg. By following these simple tips, you can make sure that financial advisor cost doesn't stand in the way of getting the advice and guidance you need.

Other questions like this you may want answered:

  • Do all advisors charge the same amount?

  • How do I know what my financial advisor is making off me?

  • Where can I find my advisors fees and managed money fees?

  • What are my financial advisor costs?

  • Is the cost of my financial planner negotiable? 

Determining how much a financial advisor costs requires looking at the different types of financial advisors and how they bill their clients. Of course, the easy answer is that a financial advisor can cost you everything if they're giving you poor advice that is not in your best interest.

Free Retirement Video

Before I answer these question, I highly recommend you watch this video I recorded that goes through how to avoid running out of money and increase your retirement income. You are also invited to set up a short 20 minute free no cost and no obligation Retirement Ready Success call by clicking here. In this short call we will

  • go over where you are now,

  • where you want to be,

  • and I will share with you some of the strategies I use with my clients to help them achieve financial freedom and peace of mind.



Commission Based

Commission-based financial advisors will typically sell you products, and they're compensated with commission from those products, whether it be a mutual fund or an annuity, life insurance, or health insurance. When working with planners like this sometimes it can be difficult to determine your financial advisor costs. They can receive commissions from any type of product that they're selling you, including a REIT.

They have a conflict of interest, as they are not only selling you products but also providing advice. This means that the more commissions an advisor makes off different investment options and annuities - for example--the less time he/she spends on your behalf since it's hard to spend too much time away from generating revenue just by being knowledgeable about investments.

Fee-Based Financial Advisor

Fee-based financial advisors, which are the most common type, work at banks, insurance companies, and broker dealers. These advisors charge you a fee on your money in exchange for managing it, and they are also compensated by selling you products. For example, they might be managing your money at Edward Jones for a fee, and then they may also sell you a life insurance policy for commission, which means they are compensated in two different ways.

So how much does a financial advisor in Roswell, Georgia, cost? Now we are going to get specific.

Fee-Only

Third Act Retirement Planning is a fee only registered investment advisor offering financial planning services, tax planning services, and investment portfolio management. The final type of financial adviser that we'll discuss in this section is the fee-only adviser. This is the type that Clark Howard recommends, and it is also the type that we are here at Third Act Retirement Planning. In Clark Howard's article he writes,

According to Barron's magazine, some $17 billion is lost in retirement savings every year simply because dishonest financial advisors steer their clients toward investments that meet general suitability requirements but aren't in the best interests of their client base. 

The fee-only financial planner is only compensated by their clients, and not by any other product companies. They only sell financial advice, and not financial products. Fee-Only financial advisors may be paid hourly, as a retainer, as a percentage of assets (AUM), or as a flat fee, depending upon the planner you choose. Fee-only financial planners are often times compensated by the amount of money they are managing. The average financial advisor fee will usually be 1% to 2%. This way is by clients' assets, which means a percentage of the total assets of a client's account. Although, an advisor may also have a fee structure based on income and net worth. We use both and we are fee only. Fee only is the easiest to determine your financial advisor costs.

Hourly Financial Advisors

Hourly financial advisors can range from $100 to $400/hour or based on your yearly income, which can range from 2% to 2.5% of your annual income. Here is Compensation and Fee Declaration we use that you may also download and use when evaluating a Financial Planner's pay: CompensationandFeeDeclaration.pdf

It's not a simple question to answer: how much does a financial advisor cost?

The reason it's difficult to determine is because there are so many types of financial advisors, and they all charge differently. Some advisors might only charge you if you make money as a result of their advice, while others might charge you an hourly rate or a flat fee. In this blog post, we'll take a look at the different ways that financial advisors can bill their clients, as well as how to find an affordable advisor who meets your needs.

When it comes to financial advisor fees, there are three main pricing models: commission-based, fee-based, and fee-only. Commission-based financial advisors make their money by selling financial products like insurance policies or investments. They may also receive commissions for referrals to other professionals, such as tax preparers or estate planners. Financial advisors typically charge an hourly rate or a flat fee for their financial planning services. However, they may also earn commissions on the sale of financial products. Fee-only financial advisors are paid solely by their clients, either through an hourly rate or flat fees. Flat fees can be based on net worth, income, and more. They do not receive commissions on the sale of financial products.

An advisor's fee structure is very important. Lowest is definitely not always the best. Plus there are hidden fees or fees that are not talked about like expense ratios in mutual funds and ETFs.

Expense Ratio

Recently, our team ran and audit on a family's portfolio. Although the financial planners' fee that was handling their money was 1% the net expense ratio on the mutual funds they selected were high at .77%. So that's a total of 1.77%. I'm assuming the brokerage services or the planner's broker dealer preferred them to recommend this particular mutual fund family. Our firm uses DFA, Vanguard, SPDRs, and Schwab to keep our client's assets under management being invested a industry low expense ratios.

So how do you find affordable financial advisor fees?

First, consider what type of advice you need. If you're simply looking for help with your investment portfolio, you might be able to find a commission-based financial advisor who charges reasonable fees. However, if you need comprehensive financial planning services, you'll likely need to work with a fee-only certified financial planner. Second, consider what type of billing arrangement you're comfortable with. If you're willing to pay an hourly rate or a flat fee for financial advice, you'll have a wider range of options to choose from. Finally, don't be afraid to negotiate. Many financial advisors are willing to discount their rates for new clients, so it's always worth asking about discounts or special rates. By following these tips, you can find an affordable financial advisor who meets your needs and fits your budget.

You now have a ballpark idea of how financial advisors are compensated and how much they cost. You can also click here to watch my free video on how to avoid running out of money in your retirement and how to potentially increase your income in retirement by making one simple change to your finances.

Financial Advisor Costs

Financial advisor costs can vary widely, so it's important to understand what you're getting for your money.

For a small account, a flat fee of $1,000 may be too much. But if you have a six-figure portfolio, working with the cheapest advisor you can find may mean you don't receive the depth of financial advice you need.

Fiduciary duty

When it comes to your finances, you want to work with someone who has your best interests at heart. That's why it's important to find an adviser with a fiduciary duty to their clients.

It's a legal responsibility to act in someone's best interest. Advisors with this responsibility have more scrutiny from the Securities and Exchange commission. The financial services industry has seen increased regulation over the years since I entered it in 1998.

Fiduciary Duty


Registered investment advisors

If you're looking for someone to manage your investments, you'll want to seek out a registered investment advisor (RIA). RIAs are professionals who are registered with the U.S. Securities and Exchange Commission (SEC) or a state regulatory agency, depending on the value of assets under their management. Unlike broker-dealers, RIAs have a fiduciary duty to put the best interests of the client first. This means that they must always act in your best interests when making investment decisions on your behalf.

RIAs typically earn their income through management fees, calculated as a percentage of a client's assets under management by the RIA.

Financial advisor fees can vary greatly depending on the services provided and the experience of the financial advisor.

Financial advisors typically charge 1% of assets they manage. Financial advisor fees can be expensive, but they can also save you a lot of money in the long run. By working with a financial advisor, you can ensure that your investments are handled in a way that is best for your goals and your budget.

2 Main Financial Advisor Fee Structures

When it comes to financial advisor fees, there are two main types: fixed fees and hourly fees. Fixed fees typically range from $7,500 (for investments under $499,999) to $55,000 (for investments over $7.5 million). Hourly fees can be anywhere from $120 to $300 an hour, depending on the advisor and the complexity of the project.

No matter what type of financial advisor fees you choose, make sure you understand what you're getting for your money. Ask the advisor to break down the fee structure so you know how much you'll be paying for each service. And remember, the best way to save money is to work with an advisor who aligns with your investing goals and budget.

Investment Strategy

When it comes to investment strategy, there are two main approaches: passive and active management. Passive investment involves buying and holding investments for the long term, and relies on the theory that the market will ultimately post positive returns over time. Active investment management, on the other hand, looks to make money off of short-term fluctuations or market timing.

Financial advisor costs can vary depending on the services provided and the experience of the financial advisor.

Comprehensive Financial Plan

A comprehensive financial plan is an important tool for achieving your long-term goals. It can help you make informed decisions about how to best use your money to achieve your objectives.

There are many different ways to create a comprehensive financial plan. Some people choose to do it themselves, while others hire a professional financial planner.

Financial Plans


Investment Management

Investment management is the process of making decisions about investment portfolios. The goal of investment management is to maximize return on investment while minimizing risk. Plain and simple. Investment management is the professional activity of selecting securities or alternative investments in an portfolio to achieve the desired level of return and risk.

There are various approaches to investment management or advisory services, including active and passive management, as well as strategic and tactical asset allocation. Financial advisory services can be expensive, but they can also save you a lot of money in the long run.

When it comes to finding a financial advisor, it's important to find someone who aligns with your investing goals and budget.

Fee Only Advisor or Fee Only Financial Advisor

If you're looking for a fee-only advisor, look no further than NAPFA. Their members are required to work only within the fee-only structure, which minimizes conflicts of interest and ensures that your financial planner acts as a fiduciary.

NAPFA's members are also held to a high standard of education and experience. All NAPFA members must have a bachelor's degree from an accredited institution, as well as three years of professional financial planning experience.

NAPFA members must also agree to adhere to a strict code of ethics, which includes a commitment to putting the client's interests first.

What About a Fee Based Advisor?

A fee-based advisor is an advisor who charges both a fee for their services, as well as commissions from selling products. While fee-based advisors do have the potential to make more money than fee-only advisors, they also have more conflicts of interest.

Fee-based advisors are still held to a fiduciary standard, which means they must put their client's interests first. However, because they earn commissions from selling products, there is a greater potential for abuse.

Investment Advisory Services

Investment advisory services are professional services provided by investment advisors who provide recommendations or make investment decisions on behalf of their clients. Investment advisory services encompass a wide variety of financial planning and investment management activities, including portfolio management, estate planning, tax planning, and more. All of these fall under the category of personal finance.

Personal Finance Requires Personalized advice

When it comes to personal finance, there are a lot of different options available. It is important to find the right solution for you, based on your goals, needs and budget. There is no one-size-fits-all solution when it comes to personal finance. However, with so many different options available, there is sure to be a solution that fits your needs.

There is no one-size-fits-all solution when it comes to personal finance, but with so many different options available, there is sure to be a solution that fits your needs. Even though a Robo advisor is not super personalized people still use them.

Robo advisor

A robo advisor is a type of financial advisor that uses technology to automate the investment process. The average Robo advisor typically use algorithms to generate and manage investment portfolios on behalf of their clients.

The Robo advisor has become increasingly popular in recent years, as they offer a low-cost alternative to traditional financial advisors. fees typically range from 0.25% to 0.50% of assets under management.

Robo Advisors

While robo advisors can offer a cheaper alternative to traditional financial advisors, it's important to remember that they are not human. This means that they can't provide the same level of personal guidance and advice human financial advisors can.

Additionally, robo advisors are not right for everyone. If you're looking for a more hands-on approach to investment management, or if you need help with financial planning activities like financial or tax planning, robo advisors may not be the best fit for you.

Robo Advisor


What's the bottom line regarding Robo Advisors?

The cost of financial advisory services can vary depending on the type of services provided and the experience of the advisor. However, fees typically range from 1% to 2% of assets under management. Robo advisors offer a cheaper alternative to human financial advisors, with fees that typically range from 0.25% to 0.50% of assets under management.

What's the best option for you?

The best option for you will depend on your individual circumstances and goals. If you're looking for someone to provide comprehensive financial planning and investment management services, then a traditional financial advisor may be the best option for you. However, if you're just looking for someone to manage your investments, then the robo-advisors may be a better option.

No matter which type of financial advisor you choose, whether robo advisors or humans, be sure to do your research. Make sure you understand how they are paid, what services they provide, and what their experience is. Only then can you make an informed decision about whether or not they are the right fit.

How do financial advisors bill their clients?

There are three main ways that financial advisors can bill their clients: by commission, by salary, or by fee. Commission-based advisors get paid when they sell products to their clients; salary-based advisors are typically employed by banks or other large institutions; and fee-based advisors usually charge an hourly rate, AUM, or a flat fee for their services + commission on insurance products, and fee only advisors charge based on flat fees, AUM, or fixed fees and never on product sales or transactions.

What Fees Are You Paying Your Advisor Now?

We would love to run a portfolio audit on your accounts and help you determine what your "all in" fees or annual fee is at no cost or obligation to you. Click here to schedule a short Retirement Ready Success call with Thomas Cloud, Jr., CFP(R): https://calendly.com/thomascloud/retirement-ready-success-call