What is an Average Financial Advisor Fee?
Financial advisors charge for their services in a few different ways. These service charges can include a percentage of assets that they are managing, hourly charges, and fixed fees. Some financial advisors also work on a commission basis.
Updated on Dec 05 2019
Average financial advisor fees
According to Nerdwallet, the average financial advisor fee is as follows, depending on your plan:
Assets under Management: 1%
Retainer fee: $2,000 to $7,500 per year
Hourly fee: $200 to $400
Per-plan fee: $1,000 to $3,000
Generally, financial advisors charge for their services in a few different ways . These service charges can include a percentage of assets that they are managing, hourly charges, and fixed fees. Some financial advisors also work on a commission basis.
The average financial advisor fee varies based on how they charge their clients. Spending money on an advisor now will help grow your money for the future. It’s important to understand where your money is going, so let’s take a look at the average amount you’ll spend on a financial advisor.
Percentage of assets under management (AUM):
The average spend under this model is 1% of your assets that a financial advisor is managing, but can range from .5% to 2%. Financial advisors using this model have a larger incentive to grow your account as their paycheck depends on your assets. You can negotiate a lower percentage depending on your assets.
This type of structure is easily managed and fees can be debited from accounts. Fees debited from IRAs are paid with pre-tax dollars .
Financial advisors’ hourly rates average between two and four hundred dollars. This type of plan is beneficial for those who wish to take more control over their finances. Advisors will give advice, but they are not responsible for implementing changes. They are not tied to the value of investments, so you can be confident you will receive objective advice.
Remember, “just like attorneys or accountants, hourly rates will vary widely based on expertise, certifications, and area of specialty. Expect to pay a higher hourly rate for experienced advisors, or advisors who have an area of specialty. Lower rates will be charged by less experienced advisors.”
A retainer fee model can be useful if you have a complex financial situation, such as a small business or rental properties. The average spend is between $2000 to $7500 per year and that can be a monthly, quarterly, or annual charge.
A retainer will generally create a financial plan, implement it, and monitor progress. They will adjust as needed. A retainer-based model will help to reduce or eliminate conflicts of interest because there is a set fee that is not based on your assets. Other benefits include flexible payment terms and a focus on advice.
Per-plan fee, by project
When a financial advisor offers a per-plan fee, you will average a $1,000 to $3,000 flat fee for each plan. Specialty advisors, like retirement planners, often charge on a per-plan basis. With this fee, you’ll get a comprehensive financial plan with guidance, but no continued services or management.
Read more about fee-only financial advisors and their benefits.
Because of the different pay models that financial advisors use, there is no set price you will pay. It’s important to choose the type of financial advisor that works best with your situation than what is the lowest cost. Different situations require different types of plans. Speak with a financial advisor today to find what best suits your situation.
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