Updated: Mar 14, 2024

How Much Does a Financial Advisor Cost?

Personal finance is a complex topic to master.
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Personal finance is a complex topic to master.

At the same time, it’s an essential part of your life to get right if you want to be financially successful.

Some people have the time and natural inclination to manage their finances themselves.

Others feel lost and overwhelmed when they consider investing.

Many may be too busy to give their finances the attention they need, too.

To help manage their investments, build a financial plan and reach their financial goals, many people consider hiring financial advisors.

Financial advisors don’t work for free, though.

Financial Advisor Pricing Structures

Financial planners’ fees and pricing models can vary by the type of advisor you consult with.

The fee can range from a small commission to a hefty annual fee.

Fees also vary based on the services provided.

Some advisors stick to basic financial advice and retirement planning.

Others may dig deeper and provide estate planning services.

To no surprise:

The more services you use, the higher advisor costs you should expect.

Sadly, how your advisor gets paid may influence the advice you receive, too.

Here are some of the standard fee structures investment advisors use to make money, as well as what to watch out for:

  • Commission fee: Based on products sold
  • Flat fee: Fixed price for a service or package
  • Hourly fee: Based on time spent with the advisor
  • Assets under management (AUM): Based on your assets overseen by the advisor

Commission fee model

Some financial advisors are commission-based.

This means they earn their money from selling products that pay them commissions. You don’t pay them directly.

Unfortunately, the commission model presents conflicts of interest.

These advisors may end up selling you less than ideal products that pay the advisor better.

For example, you may have two mutual funds to choose from.

One charges a 5.75% load (or commission) fee when you buy the product.

Another offers similar returns and management fees but doesn’t charge a load fee.

A commission-based advisor would likely sell you the fund with the load fee so they get paid.

However, the no-load fund would save you money on fees.


Commission-based advisors could have you buy and sell investments often to increase their commissions when it isn’t really necessary.

This is called churning an account.

Not all commission-based advisors do this. Even so, the conflict present should give you pause.

The benefit to these types of fee models is these advisors are willing to work with people with little to no initial investments.

Other fee models often require you to have $100,000 or more in investments to work with an advisor.

Flat fee model

The flat fee model is a unique model that can work in some situations.

You work with an advisor to design a package of services you need.

Then, you pay a flat annual fee, such as $2,000, for those services.

Flat fees can help make sure you’re not overpaying for services simply because you have a significant investment balance.

That said:

Flat fees can seem high when you have not yet built a substantial portfolio yet.

Whether this fee structure makes sense depends on your needs and ability to pay the advisor.

Hourly fee model

Sometimes people need limited advice for a specific situation. Others just like to pay for the guidance they need.

In these cases, working with an advisor that charges an hourly rate may be a good idea.

These advisors usually charge a rate, such as $150 an hour, for the time they spend working on your financial plan and working with you.

The hourly fee model is nice because you only pay for the time you need.

The downside:

You have to pay every time you need advice.

This can cause you to avoid contacting your advisor when you should due to the potential cost.

Assets under management model

The assets under management (AUM) model pays advisors based on the assets you keep with the firm.

These advisors charge a percentage of your assets on an annual basis. For instance, an advisor may have a 1% assets under management fee.

If you hold $100,000 with the advisor, they earn a $1,000 fee every year.

Traditional in-person advisors often charge about a 1% AUM fee, although this varies by advisor and services offered. Robo advisors may charge lower AUM fees.

The downside is clients with large balances pay huge fees. If you hold $2,000,000 with an advisor with a 1% fee, that’s $20,000 per year.

Combination of models

Some advisors may mix and match models depending on their clients’ needs.

For example, an advisor may state they’re fee-based. A fee-based advisor earns their pay from fees but also accepts commissions.

This can present problems for people worried about conflicts of interest.

To avoid this, consider hiring a fee-only advisor. These advisors don’t accept commissions.

Instead, they may charge hourly or based on assets under management.

To feel even more comfortable, make sure your advisor is a fiduciary.

Fiduciaries must keep your best interest in mind. Other advisors may merely have to suggest suitable investments even if they aren’t the best fit.

How Fees Affect Returns

Fees may not seem important because they feel like a relatively small part of your portfolio each year.

That’s not the case, though.

Fees turn out to be hugely important over time.

This is due to the impact of compounding returns.

Here’s a quick example to give you an idea of how much fees can make a difference.

  • Person A invests with a financial advisor that charges a 1% annual fee.
  • Person B invests with a robo advisor that charges a 0.25% yearly fee.

Both people invest $1,000 per month starting at age 25.

In this scenario, both people invest in the same investments and earn an 8% return before fees each year.

They retire at age 65.

Upon retirement, Person A retires with $2,624,813.

Person B ends up with $3,248,174, over $600,000 more.

Are Financial Advisor Fees Worth It?

Based on the above example, you may wonder if financial advisor fees are worth it.

You may expect the answer to be no, but that may not be the case.

Financial advisors can play a positive role in your financial life.

Good advisors can help steer you toward low cost investments you may not have found yourself, saving you money.

These advisors can help you address holes in your financial plan you didn’t know you had.

They can also assist you when it comes to sticking to your financial plan.

If an advisor helps you continue investing when you may not have otherwise or prevents you from panic selling, they can easily earn their fee.


You have to determine whether an advisor is worth it based on your situation, though.

Some people are incredibly knowledgeable and able to manage their investments on their own.

Others need help. It’s up to you to determine if the fee you pay will result in a larger benefit.

How and Where to Find Financial Advisors

If you would like to talk to a financial advisor to see if they’re a good fit for you, you can find them in several places.


Your local bank branch may have financial advisors, but they usually work on commission.


If you already invest with a brokerage firm, they may also have financial advisors you can speak with.

Independent firms

People looking for fiduciary fee-only financial advisors are more likely to find advisors at their own local offices.

Search online for financial advisors in your area. You can also look in financial advisor databases, such as the Certified Financial Planner (CFP) database.


In-person financial advisors aren’t your only option.

Many robo-advisor services combine technology with financial planning strategies to offer investment management at a lower cost.

Each works in different ways, so it’s crucial to find one that meets your needs.

Check your advisor first

When considering financial advisors, make sure to look at their history.

Check with Broker Check to see if the advisor has any negative actions noted on their profile.

Once you’ve found some suitable options, meet with the advisors or services you’re considering.

Ask any questions you may have and see if you’re comfortable talking with the advisor.

This should be a trusted relationship, so it’s essential to find a good fit.

Once you’ve spoken with a few options, most people have a good idea of the best fit for them.

At that point, decide if you want to move forward with hiring an advisor or not.

Get Started

Whether you decide to hire a financial advisor or not, the key is getting started.

People who have decided to hire an advisor should start by identifying potential candidates.

Look into each candidate’s background for red flags. Once you’ve vetted a few advisors, set up interviews to see if they’re a good fit.

Those that decide against hiring a financial advisor should build a financial plan.

Then, find investments that help you achieve the goals in that plan.

Finally, don’t forget to actually start investing.

Don’t delay as each year you wait is one less year your returns can compound.