How Much Do Financial Advisors Cost?

How much does it cost to work with a financial advisor? Let’s look at survey results showing how much advisors charge. The median hourly fee is around $250 for an experienced advisor. A financial plan might cost around $3,000, but costs are all over the board. Ultimately it depends on factors like location, expertise, level of depth, topics included, and more.
This video covers how much you might expect to pay, and we review the primary compensation models for advisors. Personally, I use a few of these options with clients, and current pricing is available on my website.
Fee-only advisors do not earn commissions. Instead, they might charge a flat fee, hourly fee, assets under management charges, or use other methods. Commission-based advisors earn a commission when you invest money or buy a financial product. Products include mutual funds, REITs, annuities, and other investment vehicles.
There are also “fee-based” advisors who might charge either commissions or fees.
It’s only worth paying an advisor’s cost if you get value from the relationship. While you’re probably smart enough to figure things out yourself, you might prefer to get guidance from a professional. Doing so can save a substantial amount of time, incorporate expertise, validate your current approach, or provide other benefits. But paying for a financial planner is not for everybody. If you don’t need the services, there’s no point in paying the costs to work with an advisor.
The best way to find an advisor’s pricing is to talk with an advisor or check their website for pricing details. It might cost less than you think, or you might quickly decide that you’re unwilling to pay the costs. Either way, you’re better informed, and you can decide how to move forward.
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Justin Pritchard, CFP® is a fee-only fiduciary advisor who can work with clients in Colorado and most other states.
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CHAPTERS:
00:00 Intro
00:44 When it Makes Sense to Pay an Advisor
02:40 Two Types of Advisor Compensation
05:01 How Much Fee-Only Financial Planners Cost
06:43 Hourly Financial Planning
08:50 How Much Commission-Based Advisors Cost
10:36 Annuity Commissions
IMPORTANT:
It's impossible to cover every detail and topic in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration.

[@peterjames3607]

Thank you. This is a quality overview.

[@ibenglish]

You don’t just brush the surface of things which is commendable. You deserve a Subscribe just for what your content covers in detail.

[@slebans]

Thank you for the excellent summary of investment/insurance product commission structures.

[@quitefrankly6815]

Thank for this!

[@masterblaster2593]

Great info, thanks!

[@jeanaye992]

This was a very helpful video. Thank you for compiling this information!

[@ApproachFinancial]

Glad you enjoyed it!

[@shannon2740]

Thank You

[@taryan3219]

Quality video

[@some5.3]

love this vid

[@markdimaio8396]

Very helpful

[@nareshvasishth4034]

What about Passive investing? There was only one Peter Finch. he is not there?

[@lseh4720]

When an advisor manages $ that client has in a mutual fund, does the advisor charge 1% on top of the mutual fund managers which you said charges 5% or so? Thanks.

[@ApproachFinancial]

That's a good question. There are (broadly speaking, with exceptions and ins and outs) at least two ways you can work with an advisor: 1) Brokerage relationship 2) Advisory relationship A broker charges that up-front commission (5.75% or whatever, depending on the situation). In that case, there should not be an additional advisory fee of 1% because you paid a commission or "sales charge" instead. Brokers are not supposed to double-dip and charge both commissions and advisory fees. That said, it probably happens. When you work under an "advisory" relationship, you should not pay mutual fund commissions. Instead, you'd pay the advisory fee (whether it's 1%, more, less, or another arrangement like a flat fee for investment management). The advisor might also have you pay trading fees-or not-so that's important to research. All of that said, there are still expenses in mutual funds and ETFs that you pay whether you're working under an advisory or brokerage relationship. For example, funds may have an annual expense ratio-whether you pay a commission or not. That is a cost you pay in addition to any commissions and/or advisory fees. So, it's important to understand the all-in costs with all of those pieces.

[@SD-co9xe]

Are there any larger fee only financial advisor companies? It seems like most charge a percentage of investment fee which is an enormous rip off.

[@ApproachFinancial]

Some advisors (including me) don't require you to invest assets and don't charge based on a percentage of investments. Instead, we might charge a flat fee annually, complete a project for a one-time charge, or do hourly financial planning. It's important to ask early in the process if an advisor will only help if you transfer assets to them, as it can save you some time. As far as "large" companies that offer planning services without AUM fees, it seems to be less common, and I'm not aware that any of the household names offer this with any regularity. I'm biased, of course, but I'm not sure you necessarily need a large company.

[@priscillawilliams8876]

For a start up company can the AUM be more than 1%

[@ApproachFinancial]

Yes, it's possible for a firm to charge fees higher than 1%. There are quite a few out there that do it, including some that are old, new, large, and small.

[@thebrickbuilder3476]

You forgot to mention that commissions are almost always far less than 5.75% on investments over $25,000. Also commissions are paid just once, not annually like typical AUM fees. Paying a onetime commission, even if it was as high as 5.75%, is far less over time than paying 1% on AUM. AUM fees for the fee only guys is a far better deal for the advisor than it is for the client.

[@DarkoFitCoach]

Depends how much an FA earns. If he earn index average plus 1% for him + anything over = then he is worth it.

[@jmnthe3rd]

Wow, I should have been a financial advisor. $300 an hour, to tell people what "median" means.

[@wolfpower1111]

Can I have a flat fee and not percentage.

[@ApproachFinancial]

Yes, although not all advisors offer this. Currently, I have several flat-fee options available, and some others do, as well. You can see details at www.approachfp.com/pricing/

[@FrankBatistaElJibaro]

My mind is now worthless. That was complicated.

[@Tensquaremetreworkshop]

No financial advisor can spend the time (=charges) to gather enough information to give valid advice. They use crude measures like 'inflation' (never accurate for the individual) and 'risk apatite'. They also concentrate on the investment, not the spending (which has way more effect). Lastly, if they were really good, they would be managing their own money, not yours.

[@pavankewlani6300]

Financial advisors are not get rich quick gurus. They give advice about your cash flow, investment strategies, tax planning, etc. At the end, it's up to you how you would like to follow the advice or not. Financial advisors can give such advice because they have studied 3 years for ut