On $500,000, a financial advisor charging the median 1% costs $5,000 a year. A fee-only planner charging the median flat fee costs $4,500 a year, and a one-time plan has a median price of $2,000. At this balance the two main models cost about the same in year one. They drift apart over time.
The options at $500,000
| How you pay | Year one | Over 10 years | Over 20 years |
|---|---|---|---|
| 1% of assets | $5,000 | about $60,000 | about $149,000 |
| Flat planning fee (median) | $4,500 | $45,000 | $90,000 |
| One-time plan (median) | $2,000 once | $2,000, or more if you repeat it | |
| Hourly, 10 hours a year | $3,000 | $30,000 | $60,000 |
Assumes the portfolio grows 5% a year before fees, the 1% is charged each year on the balance, and the flat fee stays the same. Fee medians are what fee-only firms publish on their own websites.
What it does to your balance
Ending balance by how you pay. Hover or tap the chart for any year.
Source: Wellspent fee report (fee-only firms' published prices); 5% yearly growth before fees
Data
| Year | No advisory fee | 1% of assets | $4,500 flat fee |
|---|---|---|---|
| 0 | $500,000 | $500,000 | $500,000 |
| 5 | $638,141 | $608,326 | $613,275 |
| 10 | $814,447 | $740,122 | $757,847 |
| 15 | $1,039,464 | $900,472 | $942,361 |
| 20 | $1,326,649 | $1,095,562 | $1,177,852 |
The 1% fee grows with your balance, so by year 20 you’d pay about $11,000 that year. The flat fee stays at $4,500 unless the firm changes its price.
When 1% makes sense at $500,000
- You want someone to manage the investments as well as the plan.
- You’re within a few years of retiring and want help turning savings into income.
- Your situation has moving parts: a pension choice, stock options, rental property.
When a flat fee or hourly makes sense
- You’re comfortable holding a few low-cost index funds yourself.
- You want a plan and someone to check in with, not someone to trade for you.
- You’re still adding to savings and your balance will grow, so a fixed price keeps your cost from rising with it.
What a fee-only advisor would look at first
At $500,000, the biggest gains usually come from the plan, not the portfolio:
- Whether you’re on track, given your savings rate and when you want to stop working
- Which accounts to add to, and whether Roth or pre-tax contributions make more sense for you
- An emergency fund and insurance, so a bad year doesn’t force you to sell
- Fund costs. On $500,000, the difference between a 0.05% index fund and a 0.75% active fund is about $3,500 a year
What to ask
- What’s my total cost per year, in dollars, including fund and platform fees?
- What’s included: planning, investment management, tax help?
- Do you have a minimum? (Half of fee-only firms that state one have none.)
- Is there any way you earn money other than my fee?
Compare other amounts
$1 million · $2 million · $3 million · $5 million · or run your own numbers in the fee calculator. For the full price picture, see how much a financial advisor costs, or browse flat-fee advisors.