Financial advisor fee calculator: how much does a financial advisor cost?
Short answer: Financial advisors are usually paid one of four ways: a percentage of the assets they manage (an AUM fee, billed quarterly), a flat or retainer fee, an hourly or per-plan fee, or commissions on products. What matters is the total dollars you pay and what those fees do to your balance over time, because a fee taken from a portfolio also removes the growth that money would have earned.
The SEC’s Office of Investor Education shows this in an investor bulletin on fees: $100,000 growing 4% a year for 20 years ends near $208,000 with a 0.25% annual fee, near $198,000 with 0.50%, and near $179,000 with 1.00%. Enter your own numbers below.
Calculate what an advisor fee costs you
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How this works: each year the balance grows at your rate, then the fee is taken from the balance. Flat and hourly fees are taken as dollar amounts. This is a hypothetical illustration using numbers you enter. It is not a projection or a promise of any return, and it ignores taxes, fund expenses, and trading costs.
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How much does a financial advisor cost?
There is no single price. The cost depends on the fee model and the services included:
- AUM fee: a percentage of the assets managed each year. On $1,000,000, each 0.10% is $1,000 a year. Many firms lower the percentage as assets grow (breakpoints).
- Flat or retainer fee: a set dollar amount per year or month, often for planning plus ongoing advice.
- Hourly or per-plan: you pay for time or a one-time written plan.
- Commissions: paid by a product provider when you buy certain products. Ask what each product pays the advisor.
Fund expense ratios, trading costs, and platform fees can come on top of the advisor’s fee. Form ADV Part 2A lists an adviser’s fees; look it up on Investment Adviser Public Disclosure.
What is an AUM fee?
AUM stands for assets under management. An AUM fee is an annual percentage of the account value, usually charged quarterly and deducted from the account. Because it is a percentage, the dollar fee rises as the account grows and falls when it shrinks.
How much would a 1% fee cost on a $2 million portfolio over 20 years?
It depends on the growth rate you assume. Using the same 4% annual growth the SEC bulletin uses as an example, this calculator shows $2,000,000 ending near $3.58 million with a 1% annual fee, compared with about $4.38 million with no fee. The fees taken add up to about $557,000, and the total gap of about $798,000 also includes the growth those fees would have earned. Change the growth rate above to test other assumptions; a higher rate makes the gap bigger.
How much is a financial advisor per month?
Divide the annual dollar fee by 12. A 1% AUM fee on $500,000 is $5,000 a year, or about $417 a month, though most firms bill quarterly. Flat-fee and subscription-style planners quote a monthly or annual price directly.
What is a reasonable fee for a financial advisor?
Reasonable depends on what you get. Compare advisors on total annual dollars and on the services included: planning, tax coordination, estate coordination, how often you meet, and who you work with. Ask each advisor to state their fee in dollars for your situation, and read the fee section of their Form ADV. Investor.gov’s Working with an investment professional lists more questions to ask.
Frequently asked questions
How much does a financial advisor cost?
It depends on the fee model: a percentage of assets managed (AUM), a flat or retainer fee, an hourly or per-plan fee, or commissions. Ask each advisor for their total annual fee in dollars for your situation.
What is an AUM fee?
An assets-under-management fee is an annual percentage of your account value, usually billed quarterly and deducted from the account. The dollar amount changes as the account value changes.
How much would a 1% fee cost on a $2 million portfolio over 20 years?
With an assumed 4% annual growth rate, $2,000,000 ends near $3.58 million with a 1% fee versus about $4.38 million with no fee. About $557,000 is fees, and the rest of the roughly $798,000 gap is growth those fees would have earned. Different growth assumptions give different results.
How much is a financial advisor per month?
Divide the annual dollar fee by 12. For example, 1% of $500,000 is $5,000 a year, or about $417 a month, though AUM fees are usually billed quarterly.
What is a reasonable fee for a financial advisor?
It depends on the services included. Compare advisors on total annual dollars and on what you receive, such as planning, tax and estate coordination, and meeting frequency, and read the fee section of their Form ADV.
Where can I see an adviser's fees?
Registered investment advisers describe their fees in Form ADV Part 2A, which you can find on the SEC's Investment Adviser Public Disclosure website.
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