How much does a financial advisor cost?

None of these is automatically better. Each one may suit a different need, and each comes with a trade-off worth weighing before you hire anyone.

• A flat planning fee. You pay a set price for a defined body of planning work. That may make the cost easy to predict and compare. The trade-off is that the fee covers the agreed scope, so ongoing management or later work may cost extra, and what a flat fee includes varies a great deal from one firm to the next.
• A percentage of managed assets. The advisor charges a yearly percentage of the assets they manage for you. That may bundle portfolio management and financial planning into one ongoing fee that moves with the account. The trade-off is that the dollar cost rises as the account grows, whether or not the work changes, it generally applies only to assets the advisor manages, and how much planning the percentage includes varies from firm to firm.
• An hourly rate. You pay for the time spent on a question or a second opinion. That may suit a single, specific decision. The trade-off is that the total can be hard to predict, and no one may be monitoring your plan once the hours end.
• Compensation from insurance placement. The advisor is paid when an insurance policy is placed through them. That may let the same team recommend coverage and carry it out. The trade-off is that it can create an incentive to recommend coverage, so it should be disclosed plainly before you engage anyone.

Some advisors combine models. That is one more reason to ask how you would be paid in dollars, on your own situation, before you decide.

We are fee-based, which includes compensation from insurance placement when protection is implemented, always disclosed before you engage us.

Signature Retirement is a $2,500 flat fee for a one-year planning engagement. It includes an initial review of your portfolio, but not ongoing portfolio management. There are no account minimums and no obligation to continue. Signature Retirement Continuum, our ongoing management, is 0.30%–1.00% per year on the assets we manage for you. It combines ongoing financial planning with portfolio management, and is available to Signature Retirement clients only. Every figure, and what each one includes, is on our Financial Planning page.

Each choice has its own trade-off. The flat fee covers one year of planning and an initial portfolio review, so ongoing portfolio management is a separate decision. The Continuum percentage covers both planning and management, and the cost may rise as managed assets grow. And compensation from insurance placement is a real incentive, which is why we tell you about it before you engage us. We explain the difference between fee-based and fee-only advisors in What is a fee-based financial planner? and how to judge any flat fee in Is $2,500 a fair price for a retirement plan?

How much does a financial advisor cost?

It depends on the pay model, the scope of work and the firm. We do not quote an industry average here, because published figures vary with what is being measured and who is measured. A more useful question is what a specific advisor would charge you, in dollars, for the work you need, and what that fee does and does not include.

Is a flat fee or a percentage of assets better?

Neither is better for everyone. A flat fee may suit someone who wants a defined plan and a predictable price, though it may not include ongoing portfolio management. A percentage of assets may suit someone who wants an advisor to manage their investments and continue the planning over time, though the dollar cost may rise as the account grows. Many people compare both against what they actually need done.

What should I ask an advisor about fees?

Ask how you would be paid, in dollars, on your situation. Ask whether the advisor earns anything else if you act on a recommendation, such as insurance compensation. Ask what the fee includes and what costs extra, and ask for the answers in writing.

This is education, not a recommendation for any one household. What a fee buys depends on the firm and the scope, so compare in writing before you decide. If you are not sure what you need an advisor to do, the Retirement Picture Check is a ten-question place to start.