How much does a financial advisor cost?

The typical fee-only financial advisor who publishes prices charges $4,500 a year for ongoing planning, $2,000 for a one-time plan, $300 an hour, or 1% of your assets a year to manage your investments. What you pay depends far more on how an advisor charges than on who they are.

These figures come from the prices fee-only firms publish on their own websites, checked word for word against the page. You can see the full breakdown in the Wellspent fee report.

The four ways advisors charge

Most firms offer more than one option. Of 2,574 fee-only firms whose websites say how they charge, 62% charge a percentage of assets, 48% offer an ongoing planning fee, 38% sell one-time plans or projects, 27% charge a flat fee and 27% bill by the hour.

Ongoing planning fee. A set annual price, often billed monthly or quarterly, for a continuing relationship: a plan, regular meetings, and help as life changes. Some firms call it a retainer or subscription. It doesn’t change when markets move.

One-time plan. A fixed price for a single project, such as a retirement plan, a review before a big decision, or a second opinion. You leave with a plan and carry it out yourself, or come back later.

Hourly. You pay for the time you use. It suits a specific question or a check-in once a year. A few hours a year usually costs less than any other model.

Percentage of assets. The advisor manages your investments and charges a share of the balance each year, usually including planning. On $1 million at 1%, that is $10,000 a year. This is called an AUM fee.

What changes the price

• Complexity. A household with stock options, a business, rental property or two countries pays more than a household with a 401(k) and a house.
• How much they do for you. Investment management, tax returns and estate coordination add to the price. Advice you carry out yourself costs less.
• Where they are. State medians for ongoing planning run from $2,100 in Minnesota to $7,450 in New Jersey. California and Colorado sit at $6,000, Texas at $3,000.
• Your assets, but only under the percentage model. A percentage fee rises with your balance. Flat, hourly and one-time prices don’t.

Percentage of assets vs a flat price, in dollars

A 1% fee and a $4,500 flat fee cost the same at $450,000 of assets. Above that, the percentage fee costs more every year, and the gap grows as your balance does.

That doesn’t make flat fees always better. A percentage fee usually includes managing your investments, and many firms lower the rate above $1 million or $2 million. See what each costs at your level: $500K, $1M, $2M, $3M, $5M, or run your own numbers in the fee calculator.

Minimums are lower than people think

Half of the 781 fee-only firms that state an asset minimum say they have none. Hourly and one-time planners rarely have one at all. If an advisor’s minimum is out of reach, a flat-fee or hourly planner is usually the way in.

What you should pay, and what you shouldn’t

With a fee-only advisor, the fee you agree to is the whole cost of the advice. They don’t earn commissions on products they recommend. Advisors who are fee-based or commission-based can be paid by product companies too, which can add costs you don’t see on an invoice, such as sales charges or fund fees that pay the advisor.

Every registered firm files a short Form CRS that lists its fees and conflicts. You can read it, and the longer Form ADV, on the SEC’s free adviser search.

Canada

Fee-only planners in Canada who publish prices charge a median C$2,300 a year for ongoing planning, C$1,900 for a one-time plan and C$250 an hour.

How to compare quotes

1. Ask each advisor for the total yearly cost in dollars, not a percentage.
2. Ask what the fee includes: planning, investment management, tax help, meetings.
3. Ask if they or anyone at their firm earn anything else from your account.
4. Check that answer against their Form CRS.

Our guide to telling whether an advisor is really fee-only walks through the last step.