How Much Does A Financial Advisor Cost? Fee Guide & Value Analysis

Financial advisors work with people to make better decisions about their money. They can guide you through retirement planning, investment choices, and long-term wealth building. Some people meet with an advisor to review their budget. Others get full-time support with large investment portfolios. 

Below, we’ll answer two key questions: What do financial advisors charge, and what do you get in return? You’ll learn about the different financial advisor fees, how to determine their value, and when it’s right to hire an advisor. 

TL;DR: Financial Advisor Cost & Value Guide

• Financial advisors typically charge 0.5-2% for AUM fees, $150-300/hour for hourly rates, or $1,000-7,500 for flat fee financial plans
• Research shows advisors can add 1.8-5.1% in annual value through better investment decisions, tax planning, and behavioral coaching
• People with financial advisors retire approximately 2 years earlier and have twice as much retirement savings ($132,000 vs. $62,000)
• Advisors are most valuable for high-net-worth individuals, during major life transitions, and for preventing emotional investment decisions
• Choose a fee-only fiduciary advisor whose payment structure aligns with your specific financial needs and goals

Common Financial Advisor Pricing Structures

Financial advisors use a few standard pricing methods. Some charge based on how much money they manage for you. Others charge by the hour or a flat rate. Let’s go over the main ways financial advisors set their prices. 

Assets Under Management (AUM) Fees

Most financial advisors use an Assets Under Management (AUM) fee, particularly if they continuously manage your investments. This means you pay a percentage of the total amount they manage for you. At Savvy Wealth, we believe in transparent fee structures that align with your financial goals.

Most AUM fees fall between 0.5% and 2% annually, with a median rate between 1% and 1.5%. For example, if you have $500,000 in investments, you'd pay around $5,000 yearly at the 1% rate.

AUM fees typically get smaller when your portfolio gets bigger. So, people with larger accounts, like $1 million or more, often pay a lower percentage than those with smaller accounts.

Hourly Financial Advisor Rates

Some advisors charge by the hour, which suits people who need short-term or occasional advice. This could be a one-time financial checkup or help reviewing a retirement plan. 

Hourly rates typically range from $150 to $300 per hour, though they can be higher in some cases. Hourly pricing makes sense if you want to pay only for the time you use instead of ongoing services.

Flat or Fixed Fee Options

Flat fees are common for people looking for one-time or yearly financial planning. A complete financial plan generally costs between $1,000 and $7,500 per year, depending on how much advice you need. 

There are also project-based flat fees. For example, an advisor may charge a set price for estate or retirement planning. Flat fees can be a good fit for people who don’t need ongoing investment guidance but want detailed advice. 

Subscription or Retainer Fees

Subscription fees work like a monthly or yearly membership. People pay between $2,000 and $10,000 annually for regular access to a financial advisor.  

This model is popular with people who want ongoing advice without paying based on their investment amount. It also simplifies budgeting because the financial advisor cost remains about the same every year. 

Robo-Advisor Alternatives

Robo-advisors are a low-cost option for people who want basic investment advice. These online services use automated systems to create and manage a portfolio. Some offer access to human advisors, but it's typically limited.

Robo-advisors usually charge 0.25% to 0.50% per year. They work well for people with simple financial goals, such as saving for retirement or establishing a starter investment account.

Pro Tip: Before hiring a financial advisor, consider reviewing our Retirement Planning Guide. Understanding the basics of retirement strategy will help you have more productive conversations with your advisor and better evaluate their recommendations.

This comprehensive guide walks you through setting clear retirement goals, calculating your needs, and optimizing your investment accounts—giving you a solid foundation before your first advisor meeting.

How Much Value Can A Financial Advisor Add?

Many people wonder if hiring a financial advisor is worth the cost. The answer depends on what kind of advice you need and how much of a difference it makes in your financial results. Let's look at what the research says about the value of working with an advisor.

Key Research on Advisor Value

Several large studies have tried to measure the value financial advisors provide. Vanguard found that using an advisor can add up to 3% more per year to your investment returns. This comes from services like behavioral coaching, portfolio rebalancing, and tax strategies, rather than trying to beat the market. 

SmartAsset found that advisors can improve returns by 2.4% to 2.8% annually after fees. Russell Investments reported an even bigger increase, saying advisors can add about 5.1% in value before fees. Morningstar estimated about 1.8% more per year for people who work with an advisor compared to those who don’t. 

These studies demonstrate that advisors add value in ways other than just investments. They also offer assistance with financial decisions, goal setting, and planning for the future. 

Real-World Examples of Cost vs. Benefit

Let’s say you have $500,000 in investments. You may pay around $5,000 per year in fees, but research shows you could get $15,000 or more in added value through better decisions and tax strategies. 

With a $1,000,000 portfolio, your fee percentage may be lower, but the dollar value of the advice is frequently much higher. Many people see the most benefit over long periods, especially during tough markets, when advisors help avoid bad decisions. 

When A Financial Advisor is Worth It

Some people benefit more than others from working with a financial advisor. In certain situations, the advice you receive has a clear impact. Here are a few examples of when hiring an advisor is right for you. 

High-Net-Worth Individuals and Complex Needs

Financial advisors are beneficial for people with $250,000 or more in investments. At this level, it’s common to deal with more than basic investing. Advisors can guide you through tax planning, estate planning, and managing multiple types of investments. 

This is also true for those who own businesses or have complicated income sources. Advisors give more transparent direction on organizing and protecting your money in these situations. 

For high-net-worth individuals, working with a financial advisor becomes even more valuable. Our guide on High-Net-Worth Financial Planning Strategies explores how wealth management changes as your assets grow. The guide shows how sophisticated tax strategies, comprehensive estate planning, and custom portfolio management can help protect and grow your wealth more effectively over time.

Major Life Events and Financial Transitions

Significant life changes are another time when hiring an advisor is worth it. This includes retirement planning, receiving an inheritance, getting married or divorced, or switching careers. 

These moments often come with critical financial decisions. A financial advisor ensures you make the most of these transitions and avoid mistakes. 

Behavioral Coaching and Emotional Investing

Vanguard’s research shows that many investors lose about 2% yearly from emotional decisions. People often buy high and sell low, particularly during market downturns. 

Financial advisors keep you on track by offering advice when markets are shaky. This coaching prevents rushed decisions and keeps you focused on long-term goals. 

Benefits of A Financial Advisor Beyond Returns

Working with a financial advisor can do more for you than simply growing your investments. Most people find that they experience better overall financial health. Research shows that people with advisors usually retire about 2 years earlier and have twice as much saved for retirement compared to those who don’t use an advisor. 

According to Northwestern Mutual’s 2024 study, people with advisors had an average of $132,000 in retirement savings, as opposed to $62,000 for those without. Beyond the numbers, advisors offer clearer financial goals and guidance through life’s big money decisions. This makes it easier to remain organized and be prepared. 

How to Choose the Right Advisor for Your Needs

Not all advisors are identical. The best choice depends on what services you want and how much you’re comfortable paying. Here are some simple ways to decide which advisor may be right for you. 

Matching the Fee Structure to Your Situation

The way an advisor charges should make sense for your goals. If you have an extensive portfolio, it might make more sense to pay a flat fee instead of a percentage. People with fewer investments might choose hourly financial advice charges for occasional advice.  

Consider what you need: ongoing support or investment management. Matching your advisor’s fee structure to your situation keeps things straightforward and easier to plan. 

Choosing A Fee-Only, Fiduciary Advisor

A good starting point is to look for someone who follows the fiduciary standard, meaning they must put your interests first. Many people also choose fee-only advisors, who get paid only by you, not through commissions on products they sell. 

Surveys show that trustworthiness is the most important factor people look for in a financial advisor. Choosing someone who is both fee-only and fiduciary gives you more confidence that their advice is centered around your goals. 

Is Hiring A Financial Advisor Worth It For You?

A financial advisor can offer helpful guidance on investments, life goals, and money decisions. Whether a financial advisor is worth it depends on your situation, but many people find that the advice leads to better financial outcomes. At Savvy Wealth, we offer a personalized approach that considers your unique circumstances.

Key Takeaways:

• Financial advisors charge in different ways, including percentage-based fees, flat fees, or hourly rates.
• Studies show that advisors can add 1.8% to 5.1% in value per year, not just through investing but by guiding smart decisions.
• Advisors can help with detailed planning, significant life changes, and avoiding emotional decisions during market swings.
• Many people retire early and save more money when working with an advisor.
• Finding the right advisor depends on your goals, financial situation, and preferred fee structure.

Action Items:

‍

‍

FAQs: Financial Advisor Costs

What is the difference between a financial planner and a financial advisor?

Financial advisors manage investments and provide general financial guidance. Financial planners create comprehensive roadmaps for your entire financial life. Many advisors hold the CFP designation. Choose based on whether you need broad planning or specific investment advice.

At what age should I get a financial advisor?

There's no perfect age. It depends on your situation. Consider consulting in your 30s-40s as finances become complex. Young professionals might need occasional consultations, while pre-retirees almost always benefit from professional guidance for optimizing retirement strategies.

Are financial advisor fees tax deductible?

Since 2018, most advisory fees are no longer tax-deductible for individuals. Exceptions include business-related investment fees, built-in product fees that reduce taxable gains, and fees paid directly from retirement accounts which use pre-tax dollars. Consult a tax professional for specifics.

How often should I meet with a financial advisor?

Most clients benefit from quarterly or semi-annual reviews, with annual comprehensive evaluations. Schedule additional meetings for major life events. New clients typically meet more frequently in the first year. Many advisors now offer virtual meetings and regular email updates between formal reviews.

‍