If you’re seeking professional financial guidance, you’re probably wondering how much a financial advisor costs. Their costs can vary greatly, so it’s important to know how financial advisors make their money.
The costs of a financial advisor can differ greatly depending on their fee structures.
Some financial advisors charge annual assets under management (AUM) fees, which range from 0.5% to 2% on average(1). So if a financial advisor manages $20,000 of your assets and charges a 0.50% AUM fee, your financial advisory costs would be $100 a year.
Some robo-advisors like Fidelity Go charge no advisory fees until your assets reach a certain level. Others, like SoFi Automated Investing and Titan Invest, charge no fees whatsoever to automatically manage your portfolio. Robo-advisors are digital platforms that build and manage investment portfolios based on factors like your financial goals, risk tolerance and time horizon.
On the other hand, some financial planners — a type of financial advisor — may charge hourly or flat fees for tailoring financial plans that meet specific goals like budgeting, saving for emergencies and retirement planning. These depend largely on the complexity of your needs. But typical hourly fees can range from $120 to $300, while fixed plan fees can stretch from $1,000 to $3,000(2).
Financial advisors may implement a variety of fee structures. Here are some examples:
The average financial advisor fee depends on several variables, but here’s a look into average costs depending on different fee structures.
| Fee type | Typical cost |
|---|---|
| AUM | 0.5%—2% |
| Hourly fee | $120—$300 |
| Fixed fee | $1,000—$3,000 |
| Commissions | 3%–6%(3) |
Automated advisory services, more commonly known as robo-advisors, are growing in popularity because they offer portfolio construction and management services at a fraction of the cost of a human investment advisor. Whereas a traditional financial advisor may charge you a 1% advisory fee, most robo-advisors charge an advisory fee of 0.25% or less.
The downside to automated portfolio advice and management is that they aren’t fully tailored to the individual. While a robo-advisor may offer lower fees and minimums, it can’t navigate the nuances of complex financial situations the way a human advisor could. If you’re looking for an inexpensive, hands-off investing approach, consider a robo-advisor. If you need assistance beyond portfolio management, including tax help and planning services, consider a human advisor.
When seeking professional advice, consider the following:
If you feel you need professional guidance in managing your finances, you may want to consider a financial advisor. But be sure to ask yourself what kind of services you need and research financial advisors to understand their experience, credentials and fees.
Financial advisor costs can vary immensely depending on their fee structures and the services you seek. Compare different fees against your needs to see which advisor is right for you.
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Fidelity offers several advisory services, including its digital advisory services, Fidelity Go and Fidelity Managed FidFolios, as well as a phone-based advisor and a dedicated advisor. The Fidelity Go robo-advisor charges an advisory fee ranging from 0% to 35%, depending on account size, while Fidelity Managed FidFolios comes with a 0.70% advisory fee. The advisory fee for Fidelity’s wealth management services ranges from 0.50% to 1.50%, while its private wealth management services come with a 0.20% to 1.04% advisory fee.
Financial advisor fees vary depending on fee structures. For example, the typical AUM fee ranges from 0.5% to 2%, and a financial planning hourly fee usually ranges from $120 to $300.
If you need professional guidance in managing your finances and you find one that can help you reach your goals, the fee could be worth it.
You may consider a financial advisor if you have at least $50,000 in investable assets. But even people with far less can find a financial advisor and fee structure that meets their needs.(4)
Many financial advisors charge fees as a percentage of AUM, which typically ranges from 0.5% to 2%. But fees can vary greatly depending on fee structure and the services you need.
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