Hiring a financial advisor can be a great move to help you achieve your financial goals and establish an investing strategy based on your individual needs and circumstances. Advisors can work with you to develop a personalized financial plan and build an investment portfolio to meet your longer-term goals, as well as help you plan appropriately to enjoy a comfortable retirement.
What Does a Financial Advisor Do?
How Much Does a Financial Advisor Cost?
The cost of hiring a financial advisor can vary significantly based on the services provided. Paying a 1% fee on your assets managed by a financial advisor is quite common, but there are at least seven ways financial advisors are compensated by clients, each with varying costs.
1. Financial Advisors Who Charge Based on Percentage of Assets Under Management (AUM)
This is the most common way traditional financial advisors charge for their service. This is called the “assets under management “ or “AUM” fee model. The current industry standard is to charge anywhere from 0.50% – 2% of the assets being managed on an annual basis.
2. Commission-Based Financial Advisors
When a financial advisor is commission-based, they make commissions from selling you certain financial products (such as mutual funds, insurance products and other types of securities). This model is becoming less and less popular, as there may be an inherent conflict of interest involved.