How Much Does a Financial Advisor Cost?
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A financial advisor costs a few hundred to a few thousand dollars per year. The fee largely depends on the services you’re paying for, as well as where you live and the fee structure the advisor uses.
🤓 Is it worth paying a financial advisor?
Some research indicates that financial advisors may increase a client’s average annual returns by about 3% per year due to improvements in asset allocation, investment selection, rebalancing, tax optimization and overall financial planning.
Typical financial advisor fees
Three of the most common fees are AUM fees, flat fees and hourly fees, but you may also encounter other fees as well when you hire a financial advisor.
Fee type | Commonly associated with | Typical cost |
|---|---|---|
Assets under management (AUM) | Managing your portfolio of stocks, bonds and other investments. | 0.25% to 0.50% annually for a robo-advisor; about 1% for a financial advisor. |
Flat annual fee (retainer) | Special projects, such as analyzing whether to buy or sell your business. May also provide more access to the advisor. In some cases, advisors may substitute flat fees for AUM fees. | Typically $2,500 to $9,200. |
Hourly fee | Special projects, such as helping create a financial plan for a specific situation, such as a divorce. | $200 to $400. |
Per-plan fee | Creating a detailed, written comprehensive financial plan for a client. | Typically $3,000, but varies by service. |
Transaction costs and expense ratios | Fees that trading platforms charge the advisor to use, or fees that mutual funds, ETFs and similar instruments charge. | Varies; expense ratios may range 0.05% to 0.75%. |
Custodial fees | Fees that the custodian charges you to hold your assets. | May be around 0.10% to 0.15%, but varies by account size, asset type, transaction activity and custodian. |
Bundles the firm’s investment management services and related custodial transaction costs together for one price. | Varies by account size and type. | |
Commission | Money earned from financial institutions for buying or selling certain products to clients. | 3% to 6% of investment transaction amount. |
To compile this information, we reviewed industry studies on average rates among financial advisors. Those studies included:
We also reviewed fees charged by providers reviewed by the NerdWallet investing team. | ||
» Run the numbers in our financial advisor fee calculator
Financial advisor fees by service
Financial advice comes in many shapes and sizes. In some cases, the cost of service will depend on the type of service you choose. Knowing what you get for the price you pay is key to determining when a financial advisor is worth it.
Investment management from a robo-advisor
If you’re only interested in picking and maintaining investments, a robo-advisor may be the cheapest option. These algorithm-based services build and manage portfolios based on the user’s goals, time frame and risk tolerance. Robo-advisors often have no or low account minimums, so it's easy for beginners to start investing.
Typical cost: 0.25% to 0.50%, which works out to $125 to $250 a year on a $50,000 account balance.
What you get for that fee: Algorithm-based recommendations about where to put your money. Robo-advisors generally don't provide customized financial plans or personalized investment advice.
» Check out our roundup of the best robo-advisors
Financial advice only
If you’re only looking for financial advice (rather than picking and maintaining specific investments, which is investment management), you’ll typically pay an hourly or flat fee.
Hourly rate
Typical cost: $200 to $400 an hour.
What you get for that fee: Meetings to check your retirement savings progress, plan for the kids' college or get a workable budget. Or, if you want a full financial plan, you can get that. You carry out the plan on your own, and there is no ongoing oversight from the provider unless you request and pay for additional time.
Flat fee per plan or project
Typical cost: Varies, but $3,000 is typical for a financial plan.
What you get for that fee: A written, comprehensive financial plan and guidance for how to follow it, but no ongoing services or investment management.
Financial advice and investment management together
Assets under management (AUM) fee
This fee usually varies with how much money the advisor manages for you. Some advisors also have account minimums or minimum fees.
Typical cost: The median AUM fee among human advisors is about 1% of assets managed per year, though they can be as low as 0.30%. Many advisors have tiered AUM fees, meaning they charge a lower percentage on higher balances.
What you get for that fee: Typically an ongoing relationship with a team of advisors or a dedicated advisor.
Retainer for services
Typical cost: $2,500 to $9,200 a year.
What you get for that fee: Typically, comprehensive planning and investment management. The advisor will create a financial plan, help you implement it, monitor your progress and adjust as needed.
» Check out our roundup of the best financial advisors
Commission
Typical cost: Varies by investment, but mutual fund sales loads generally fall between 3% and 6% of your investment. This is a one-time fee paid at purchase or sale.
What you get for that fee: We recommend avoiding commission-based financial advisors. While some undoubtedly put your needs first, others may be swayed by the product that pays the highest commission. And the advisor may only be required to recommend investments that are suitable for you, but not necessarily the best fit.
» Next step: See our guide to choosing a financial advisor
Why a financial advisor's fee structure matters
No matter which type of financial planning service you choose, be sure to understand exactly how much you'll pay for services and what the services entail. That's especially important because there are so many different payment structures used. Before hiring an advisor, know these terms:
A fee-only advisor doesn’t earn any commissions from investments. These advisors face the fewest conflicts of interest when offering advice. Fee-only advisors may still piece together more than one fee type — for example, charging an AUM fee for investment management and a flat fee for financial planning.
A fee-based advisor charges a fee but may also accept commissions from investments. Many advisors combine commissions with an AUM fee.
A commission-only advisor earns their income from commissions on the investments bought and sold on your behalf.