Financial Advisor Cost: Average Fees Explained

Financial advisors get paid in a few different ways, and the pricing model affects what you pay as much as the advisor does. Some charge a percentage of the money they manage, some bill by the hour, and some sell a one-time plan or an annual retainer. Automated robo-advisors charge a lower percentage in exchange for less personal contact.

This page covers published fees, not investment advice. What is right for you depends on your goals, your accounts, and how much help you want. A licensed professional can look at your full picture.

The same advice can be priced in several ways. The models below are the ones most often published.

Flat fee or retainer: you pay a set yearly amount, listed at $6,815/yr on average per NerdWallet. A separate source lists annual retainers at $6,000 – $10,000/yr. This model does not rise or fall with your account balance.

One-time plan: an advisor builds a financial plan for a single payment, averaging $2,926. Harness lists comprehensive plans at $2,500 – $5,000.

Hourly: you pay for the time you use, which suits a specific question. The average hourly rate is $307/hr, and another source lists $200 – $400/hr.

Subscription: some firms charge monthly for ongoing access. That model is listed at $200 – $600/mo.

The most common approach is a yearly fee set as a percentage of the assets an advisor manages. The average is 0.96%, per NerdWallet. Because the fee is a share of your balance, the dollar cost grows as your portfolio does, and the same percentage costs more on a larger account.

It is worth asking how the percentage works. Some firms use a single rate for all assets, others lower the rate at higher balances, and some count only certain accounts. Ask for the fee in dollars on your actual balance, so you can compare it with a flat-fee quote. Fund expenses inside your investments are usually separate from the advisor's fee, so the total cost of investing is higher than the advisor's percentage alone. Ask for both numbers when you compare advisors, and check whether trading costs or account custody fees apply on top of the advisor's charge.

If you want a low cost financial advisor, automated services and hybrid models charge less than traditional advisors.

Robo-advisors are listed at 0.25% – 0.5%. Vanguard Personal Advisor Select lists 0.3%, and Betterment lists 0.25% for balances in its published tier. These services generally build and rebalance a portfolio using software, and some add access to human advisors at higher tiers. They usually offer less custom planning than a traditional advisor, so check what is included.

• Fee model. Percentage, hourly, flat, and subscription pricing each scale differently.
• Account size. A percentage fee grows as your balance grows.
• Scope of service. Investment management alone costs less than full planning for taxes, estate, and retirement.
• Advisor credentials and experience. Firms with specialists may charge more.
• Location. Rates can differ by market.
• Minimums. Some firms require a minimum account size or minimum fee.
• Product costs. Fund expense ratios and trading costs are paid in addition to the advisor's fee.

Averages differ because the groups they describe differ. One figure may come from a survey of advisors, while another is a typical range given by an industry source. They may also count different services, such as investment management only or full planning.

NerdWallet reports an average of 0.96%, while Harness lists 0.75% – 1.5%. The two are close at the center but differ in how wide a range they describe. Your own quote may sit above or below either.

• How are you paid, and do you earn commissions on products you recommend?
• What is your total fee in dollars on my balance?
• Which services does the fee include?
• Is there a minimum balance or minimum fee?
• Do you charge fees on top of fund expenses and trading costs?
• Can I end the relationship, and are there exit fees?

You should also ask whether the advisor is a fiduciary and get the answer in writing. You can look up an advisor's registration and history through the SEC's Investment Adviser Public Disclosure site or FINRA's BrokerCheck.