How Much Does a Financial Advisor Cost?

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couple talking to a financial advisor

Spending money to save money may seem counterintuitive, but hiring a professional can be one of the best ways to ensure you’re on the right track to meet your financial goals. From preparing for retirement to diversifying your investment portfolio, financial advisors can make sure all your ducks are in a row.

But how much do they cost? And who, exactly, are they?

What does a financial advisor do?

Broadly speaking, financial advisors are professionals who assist their clients with all manner of financial planning, from allocating invested assets to preparing for long-term financial goals like retirement.

But there’s no one set, formal designation that all financial advisors must acquire — which can present a danger to the consumer.

Malik S. Lee, the founder of Atlanta-based wealth management firm Felton & Peel, explained that there are “about 140 to 150 different designations out there,” resulting in a dizzying alphabet soup of certifications and honorifics. But regardless of how official they sound, not all these so-called “certifications” are actually rigorous programs, and some may not be overseen by a governing board or body.

Before you hire any financial advisor, your best course of action is to look up your potential planner’s designation in the Financial Industry Regulatory Authority (FINRA) database. You’ll be able to see exactly what kinds of hoops they had to jump through as well as any listed complaints or disciplinary measures. This can help you ensure that your advisor’s knowledge and recommendations are worth the cost of their services.

How much does a financial advisor cost?

How much a financial advisor costs depends on a variety of factors, including where you live, what kind of financial advisor you’re talking to and and the specific financial advice you’re seeking. In general, financial advisors operate under one of the following common fee structures.


As in any other commission-based sales industry, financial planners who use this pay structure receive a certain fee when they sell a specific product — often an annuity, life insurance plan or mutual fund. According to Lee, these fees usually are expressed as a percentage of the product’s purchase price, ranging from about 2.5% to 7% for annuities and 5% or 6% on mutual funds.


Fee-only financial advisors don’t sell specific products for commission but rather offer their planning services for a given fee, which might be assessed in a few different ways. The most common are flat fees, hourly rates or percentages of assets under management.

  • Flat fees are just that: pre-negotiated rates you agree to pay for certain financial planning services. Depending on the firm and the specific service, they might range from about $750 to $5,000 and may or may not include a set amount of follow-up time during which you can ask questions or make changes. Always be sure you’re clear about exactly what’s included in the flat rate before you sign any paperwork.
  • Hourly rates are charged per hour worked and may fall anywhere from $150 to $450. Typically, higher rates will be charged by more seasoned planners or those working at their own firms, whereas larger firms are able to pool their time and resources in order to keep their hourly rates lower.
  • Assets under management (AUM) are fees charged as a percentage of the value of the assets you entrust to the financial planner. The average AUM cost has been “working its way down over the course of the years,” according to Lee, and now sits at about 1% to 1.25%. “If you’re paying more than that,” said Lee, “you’re overpaying.” But it’s important to keep in mind that some advisors require a minimum AUM fee — that is, a minimum payment to the advisor. That might mean you’re getting a less generous deal if you have less money. For instance, if you place $100,000 of assets under the management of a company whose AUM charge is 1% but that requires a minimum AUM fee of $5,000, you’re effectively paying 5% — despite the apparently low AUM charge.
  • Other payment configurations also may be available depending on who your advisor is. For example, Lee’s firm offers financial planning services for a set monthly rate, while other planners might charge a percentage of your total net worth or income as opposed to a percentage of your assets under management.


Fee-based financial advisors are a composite of the above two structures: They perform comprehensive financial planning for their clients for one of the fee structures listed above but also sell products for a commission.

Other financial advisor fees and tangential costs

Along with the fee structures listed above, you may be responsible for other costs associated with financial planning services, such as:

  • Performance-based fees for hitting benchmarks, expressed as a percentage of your gains above a certain, preset threshold. These are sometimes known as “fulcrum fees.”
  • Flat fees for a la carte services or products, such as when you purchase a life insurance policy from a fee-based financial planner.
  • Investment-related fees, such as trade commissions or mutual fund management fees.

Not ready for a financial advisor’s cost? There are other options

Although some financial advisors, including Lee, prioritize making financial planning affordable even to those who don’t have towering net worths, professional help can be costly — and today’s all-digital world makes it easier than ever to DIY your finances.

For example, robo-advisors like Wealthfront and Betterment make it possible to create a diversified investment portfolio without too much research and at potentially lower rates than some financial planners. You also can open your own investment account with a brokerage like Fidelity or TD Ameritrade and take on the task of allocating your assets yourself.

Apps like Stash and Acorns make investing as easy as downloading an app and parting with a spare $5 — even if you know absolutely nothing about the market. But therein lies the rub, according to Lee: Because we do have so much access and information at our fingertips, it’s easy to DIY ourselves into a major financial flub.

By hiring a financial advisor, you can help safeguard yourself against financial accidents, such as undercontributing to your retirement plan or accidentally triggering an additional taxable event. Although technology has changed the face of financial planning, in many ways for the better, there’s no such thing as a piece of software that can create a comprehensive, personalized financial roadmap. To quote Lee, “You still need a human for that.”

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