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How Much Does a Financial Advisor Cost?

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As you consider working with a financial advisor, understanding how fees are structured can provide useful context. According to the 2024 Kitces Report, advisors who charge based on assets under management (AUM) typically use a graduated fee structure and charge a median blended rate of 1.00% on portfolios up to $1 million, with the rate gradually declining on larger balances. For hourly arrangements, the median rate is $300 per hour, according to the same 2024 report. Subscription-based financial planning also carries a typical annual fee of $4,500, while standalone project fees for a comprehensive plan tend to average around $3,000. These options reflect the variety of ways advisors get compensated, each offering different levels of service and flexibility.

If you need help finding a financial advisor who serves your area, SmartAsset’s free tool can connect you with your advisor matches.

Types of Financial Advisor Fee Structures

There are five main ways that registered investment advisors (RIAs) charge for their investment advisory services and/or earn compensation. The table below breaks them down:

Types of Financial Advisor Fee Structures

Fee TypeDescription
Percentage of Assets Under Management (AUM)Percent of the total assets of a client’s account, which could follow a tiered schedule. Generally speaking, the higher your asset level, the lower the percentage fee you’ll pay.
Hourly ChargesThe rate charged per hour, is typically for a special project or consulting.
Project-Based or Standalone Planning FeesClients are charged a one-time fee for a comprehensive financial plan or a specific project.
Retainers/Subscriptions Clients pay a recurring fee, often monthly or quarterly, for ongoing access to planning services. This structure supports a more consistent, collaborative relationship.
CommissionsAdditional compensation is earned when a purchase or a trade is made.

Fee-Only vs. Fee-Based

Advisors may charge one of the above fees or a combination of them. Fee-only advisors earn money exclusively from fees paid by their clients. They don’t earn commissions or other types of compensation from selling certain financial products or trading specific securities. Fee-only advisors can still have potential conflicts of interest, though they must disclose them.

Fee-based advisors, on the other hand, earn money both from the fees their clients pay, as well as third-party commissions and other forms of compensation. This happens when an advisor is dually registered as a broker-dealer or insurance agent, allowing them to sell affiliated products, investments or policies for compensation. This can present a potential conflict of interest that needs to be disclosed, though fee-based advisors still abide by fiduciary duty.

How Much Do Financial Advisor Fees Typically Cost?

The figures shown below are drawn from the 2024 Kitces Report, “How Financial Planners Actually Do Financial Planning,” which is based on survey responses from 621 U.S.-based financial advisors. It outlines median fees across common pricing models, including AUM, hourly, project-based, subscription and commission-based compensation.

AUM Fees

The assets under management (AUM) model is the most widely used fee structure among financial advisors. In fact, 92% of advisors use an AUM fee structure, with 86% relying on AUM fees as their main source of revenue, according to the Kitces Report. Under this approach, advisors charge a percentage of the investment assets they manage on behalf of the client.

There are two common methods for applying AUM fees: the graduated schedule and the cliff schedule. In a graduated schedule, only the portion of assets within each tier is charged at that tier’s rate. For example, an advisor could apply a 1% fee to the first $1 million in assets, then reduce the rate to 0.80% for the next $1 million, with each tier charged at its own rate—producing a weighted average fee across the portfolio. In contrast, a cliff schedule applies a single rate to the entire portfolio based on the highest tier the assets fall into. This can result in abrupt changes to the total fee if a portfolio crosses a threshold.

While graduated AUM fee schedules are more common than cliff schedules, both typically include four rate tiers of asset ranges and fees.

Type of AUM Fee ScheduleAsset TiersMedian Rates
Graduated$0 – $1 million
$1 million – $2.5 million
$2.5 million – $5 million
Over $5 million
1.00%
0.80%
0.65%
0.50%
Cliff$0 – $500,000
$500,000 – $2 million
$2 million – $4 million
Over $4 million
1.15%
1.00%
0.85%
0.75%
The figures above come from 2024 Kitces Report: “How Financial Planners Actually Do Financial Planning.” Advisors on the SmartAsset platform that you may be matched with may charge higher fees than those shown above. Please carefully review fee structures with your investment advisor and review your advisor’s Form ADV and CRS.

Hourly Charges

As of 2024, the median hourly fee for financial advisors is $300. This reflects a modest increase from $250 in 2022, with advisors across the spectrum adjusting their rates upward. While this model is typically used for one-off planning needs or limited-scope engagements, the actual revenue earned per hour may be lower due to unbilled client work. Despite the relatively high headline rate, many hourly advisors report working roughly two unbilled hours for every one that is billable, the Kitces survey found.

Project-Based or Standalone Planning Fees

Standalone planning engagements typically carry a flat fee. In 2024, the median charge for a standalone financial plan is $3,000, unchanged from 2022. That amount can vary based on the plan’s scope, with simpler plans averaging $2,750 and the most extensive plans reaching $3,500 or more. These fees are used by firms that want to recover planning costs even when clients don’t pursue implementation or asset management services

Retainers/Subscription Fees

Subscription or retainer-based models saw a median annual fee of $4,500 in 2024, up from $3,000 in 2022. This sharp increase is partly attributed to firms adjusting prices for smaller or time-intensive clients. Most firms using this model also combine it with other structures such as AUM or project fees. Only 17% of firms that offer subscription pricing rely on it as their sole revenue model.

Commissions

Commission-based compensation lacks a standardized median dollar amount in the report. However, advisors using commissions generally earn higher hourly revenue equivalents than those using subscription or hourly models. Advisors who serve lower-net-worth clients may use this model alongside AUM or planning fees, rather than on its own.

Other Financial Advisor Costs You May Encounter 

Close-up of a person counting cash in their wallet.

The financial advisor cost might not be all you pay when opening an account. In addition to paying the advisor, you’ll also be responsible for brokerage, custodial and other third-party fees. For instance, if a financial advisor uses mutual funds or exchange-traded funds (ETFs) in your account, you’ll have to pay costs associated with those funds in addition to the fee that you pay your advisor.

These costs can add up. A 1% mutual fund fee can cost a young investor as much as $590,000 over 40 years. When discussing fees with your financial advisor, you should be sure to ask about any additional costs you may incur.

Where to Find Info on Financial Advisor Fee Schedules

To understand what you might pay when working with a financial advisor, review the firm’s Form ADV, a document filed with the SEC. This form outlines the types of fees the advisor charges for their services. In Section 5, firms are required to indicate each type of fee structure they use.

Part II of the Form ADV—often referred to as the brochure—offers more detailed explanations. It breaks down the firm’s fee schedules, how fees are calculated, and whether the advisor earns additional income from sources beyond client payments.

Are Financial Advisors Worth Paying?

There are plenty of pros and cons to working with a financial advisor, especially depending on the type of service you’re looking for. For the most part, financial advisors offer you a breadth of experience to help protect and grow your assets. They can help with a number of things from investing to retirement and estate planning. If they can protect you from a significant loss or help your assets grow significantly then it is probably worth the cost.

If you’re uncertain about any of these activities when it comes to your money then a financial advisor may be worth their fees to you. A financial advisor can even grow with you as you have a new turning point in your life that requires a fresh financial perspective. For example, having a child changes your mindset.

The real key to making sure you feel like the fees of a financial advisor are worth it is whether the fees are fair or not. You don’t want to overpay for services and in many cases, you may want to only pay for results. Understanding the payment terms can help you assess whether the cost feels justified.

Here are five common ways a financial advisor can add value to your finances:

  • Customized advice: Financial advisors can provide personalized advice based on your financial situation. This can include creating a customized investment strategy, planning for large expenses like home purchases or children’s education, and adjusting your financial plan to life changes.
  • Asset management: Advisors actively manage your investments, making adjustments based on market conditions and your evolving financial goals. This includes rebalancing portfolios to maintain a strategic asset allocation and risk level aimed at improving returns and minimizing losses.
  • Create a retirement plan: An advisor can help you calculate how much you need to save for retirement and develop a strategy to achieve those goals. They can also help you resolve complex retirement issues by creating a withdrawal strategy, optimizing Social Security benefits and managing a pension.
  • Estate planning and risk management: A financial advisor could help plan your estate by advising on wills, trusts and tax strategies. Additionally, financial advisors can assess insurance needs to help you protect against unexpected emergencies.
  • Regular financial check-ups and adjustments: An advisor can conduct regular reviews of your financial plan to make sure that it aligns with any life changes or financial shifts. This ongoing oversight helps catch and address potential issues early.

How to Make Sure That Financial Advisor Fees Are Fair

Before you agree to work with an advisor, make sure you understand the advisor’s fee structure and what services that fee includes. Some advisors may charge extra for certain services and programs. It shouldn’t be difficult for an advisor to explain how he or she is adding value to your accounts.

If an advisor gives a roundabout or elusive answer, steer clear. It’s a red flag if an advisor tells you not to worry about costs. Ditto if he or she implies that his or her services are free. If an advisor makes money from commissions, be sure to inquire about his or her fiduciary responsibility to put your best interest first.

You should know all of an advisor’s compensation sources, and if there are any other professionals they work with. Some advisors include tax-planning services without an additional cost, but many partner with accounting firms for all tax-related work. That means tax and legal services may incur an additional cost.

How to Minimize Financial Advisor Fees

Once you have determined the type of financial advice that you need, here are five additional tips to help you minimize fees when choosing an advisor:

  • Choose the right fee structure: Fee-only advisors charge a set rate and don’t make commissions from selling products. This fee structure could also reduce potential conflicts of interest. Fee-based advisors, on the other hand, might get commissions on top of the fees you pay, which could influence their advice.
  • Comparison shop: Don’t settle for the first advisor you meet. Shop around, and compare fees and services offered by different advisors. This can help you find the best match for your financial goals and budget.
  • Negotiate fees: Once you choose an advisor, don’t be afraid to negotiate the fees. Some advisors may be willing to lower their rates based on the amount of assets managed, or if you bundle more services with them.
  • Ask about all costs: Inquire about all possible costs involved with their services, including any additional charges for special financial products or services. Make sure you understand what you are being charged and why.
  • Monitor your advisor’s performance: Review the performance of your financial advisor regularly to confirm that you are getting good value for the fees you are paying. If your advisor’s performance does not meet your expectations or justify the costs, it may be time to look for another advisor.

Do Banks Offer Free Financial Advice?

Depending on what you’re looking for, you may be able to cut down your costs quite a bit by getting relatively easy questions answered by your bank. Most banks offer free financial advice from banking or financial professionals. Many larger banks offer certified financial advisors that you can consult with and get your questions answered.

These professionals work for the bank, though, so they may not have your best interest in mind at all times. It’s important to understand what the relationship is and how it works before jumping at the chance to get free financial advice. You may also end up paying more in fees at your bank for getting access to a service for more serious inquiries.

Robo-Advisor Fees vs. Traditional Advisor Fees

If you’re just starting out and have a small balance, you might consider working with a robo-advisor. As a rule of thumb, robo-advisors typically charge lower fees than traditional advisors. While traditional advisors typically charge higher fees, robo-advisor fees can be 0.25% to 0.50% of AUM, according to a 2023 Advisory HQ report.

Of course, you’ll be getting different levels of service from each type of advisor. Though both provide portfolio management, a robo-advisor won’t guide topics like estate planning and insurance planning. Also, you’ll have limited access to humans with a robo-advisor. Typically, robo-advisors are recommended for people with less complicated situations and less to invest, while traditional advisors are suggested for those with more money and more complex financial situations.

Bottom Line

A financial advisor reviewing a financial plan with new clients.

Advisor fees can vary widely depending on how services are delivered, how clients prefer to engage, and what kind of planning is involved. From asset-based pricing to hourly consultations and subscription models, each structure reflects a different approach to working with clients. Knowing how fees are structured—and what they do and don’t cover—can make it easier to compare offerings and determine what works best in your situation.

Tips for Finding a Financial Advisor

  • Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Consider a few advisors before settling on one. It’s important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.
  • If you’re worried about the financial advisor costs, consider using a robo-advisor. Robo-advisors typically require lower minimum investments and charge lower fees. This makes them a better option for people with less money to invest.

Next Steps

Do you want to learn more about financial advisors? Check out these articles:

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