How Much Does a Financial Advisor Cost? A Breakdown of Common Fees

Financial advisors play an important role in making important money decisions, from investing to buying insurance to saving for—and withdrawing funds in—retirement. But how much do financial advisors cost?

The short answer: It depends. Financial advisors use a number of different fee structures depending on the services you need and how much money you’re investing.

Average Cost of Financial Advisors

What you pay for a financial advisor depends on the services they provide, the size of your portfolio, and their specific compensation structure. Local cost of living, the advisor’s level of experience, and other factors can also impact your costs.

One of the most common compensation structures that financial advisors use is called percentage of assets under management. According to data from AdvisoryHQ, the average person can expect to pay a 1.02% fee for $1 million in assets—that means, in this example, you’d pay a financial advisor $12,000 a year to manage your money.

But not every financial advisor structures their fees this way (and not everyone has $1 million in assets). For example, some advisors might charge a flat fee for a specific project, like estate planning, or a flat retainer fee each year. Again, these financial advisor fees can vary significantly, often between $7,500 and $55,000.

Below, we’ll review the cost of human financial advisors. You can save a lot of money with other types of financial advisors, like robo-advisors and online financial planning services, but you’ll miss out on meeting an expert face-to-face and talking through your questions, concerns, and options.

How Financial Advisors Get Paid

Not every financial advisor structures their fees the same way. It’s important to ask an advisor how you’ll be charged before agreeing to work with one.

If you don’t understand their high-level explanation, ask them to break down their fee structure using real numbers based on your projects, goals, or investments. Need help narrowing down your search? Check out these questions to ask a financial advisor to make sure you hire the right person for the job.

Below, we’ll break down the most common ways financial advisors charge their clients.

Fee Structure	What It Means for You
Percentage (AUM)	Advisors charge you a percentage—on average, between 0.59% and 1.18%—of your total investments.
Commission	Advisors only make money when you purchase a financial product they recommend, like a specific stock or insurance policy.
Fee-Only	Advisors may charge a set fee for a specific project, an hourly fee, or an annual retainer fee. They may also charge a percentage for managed portfolios.
Fee-Based	Advisor fees are largely standard hourly or flat rates and/or a percentage of assets, though the advisor may earn commissions if you make specific purchases.

Percentage of Assets Under Management

Financial advisors commonly charge clients a percentage of their assets under management (AUM). This means they’ll take a small cut of your total investments.

For many investors, paying a percentage of assets under management tends to be more expensive than a flat rate. However, it’s money well spent. Because financial advisors are incentivized to make your money grow—the more your investments earn, the more your advisor gets paid—they’ll likely be more strategic with how they invest your money.

Typically, financial advisors will reduce the percentage they charge as your investments grow–though that doesn’t mean you’ll pay less in fees overall. For example, the average financial advisor AUM fee for a person with $50,000 is 1.18%, according to the Advisory HQ data. That’s $590 a year.

An investor with five times as much ($250,000) might only pay a 1.07% AUM fee. While the percentage is smaller, that investor pays the advisor $2,675 a year. Similarly, a person with an investment portfolio of $30 million with an AUM fee of 0.59% will pay $177,000 a year to their advisor.

Assets under management fees are higher for in-person investors. You can find fees closer to 0.50% if you go with a robo-advisor.

Commission

Much like a real estate agent takes a cut of a house sale or a car salesperson earns money for selling a new set of wheels, some financial advisors earn commissions when you buy investment products they recommend.

Commission-based financial advisors don’t earn those commissions from you. Instead, they’ll earn a percentage of the cost of the product you buy from the company selling the product, typically between 3% and 6%.

The advantage? You don’t pay any financial advisor fees. Your only costs are the financial products (like stocks, mutual funds, and insurance policies) you buy.

The drawback? Commissioned advisors aren’t held to the same fiduciary standards as fee-only advisors, so they’re not legally obligated to have your best interest in mind. Instead, they may steer you toward more expensive products or products you don’t need so that they can earn a larger commission. 

Such advisors can earn commissions from various sources, including:

• Stocks purchases
• Mutual fund loads
• Annuities sales
• Newly opened accounts
• Surrender fees for closing an account

All commission-based advisors must disclose their commissions in a Best Interest Contract Exemption (BICE).

Fee-Only

Other financial advisors charge various fees for their services. After all, financial advisors do a lot of different things, from budget planning to investing to helping you buy insurance.

Some may have flat fees for their services, such as creating a financial plan, while others may charge clients hourly for basic financial counseling or for special projects, like estate planning, a business exit strategy, or saving for a specific goal. In some cases, financial advisors may charge an annual retainer fee to work with you.

The amounts for these fees can vary significantly, but it’s not uncommon to pay $100 an hour or more and several thousands of dollars for basic projects.

In some cases, advisors may charge flat fees for certain services but an AUM fee to manage your portfolio.

Fee-Based

Similarly, financial advisors might charge a range of fees—AUM, hourly, per-project, or retainer—and also make money off commissions. Similar to commission-based advisors, these advisors aren’t bound to fiduciary standards but must disclose their commissions.

Generally speaking, fee-based advisors only work with high-wealth investors.Still confused? Review our detailed breakdown of commission vs. fee-based financial advisors to determine which is right for you.

Can You Negotiate Financial Advisor Fees?

You can try to negotiate fees with a financial advisor, though they may not always be receptive. The more money you invest with an advisor, the more likely the advisor will be open to negotiation.

If you’ve been paying a percentage based on assets under management but your investments have grown considerably—i.e., in the millions of dollars—you could stand to save a lot of money by switching to a flat rate. Ask your financial advisor if they’d be willing to switch their fee structure, and be ready to find a new advisor if yours won’t budge.

Bottom Line

Financial advisor fees can vary depending on the structure your advisor uses. Often, advisors charge a percentage of assets under management (around 1%)—and the more money you have invested, the smaller the percentage gets. Advisors may also charge flat or hourly fees, and some might even earn commissions when you purchase financial products they recommend.

Understanding how a financial advisor would charge you to manage your portfolio and offer financial advice is important before hiring said advisor. Ask good questions and interview a few potential candidates before making a decision.

Take your time. After all, choosing the person to manage your money is a big decision with major ramifications for your retirement planning.