How much does a financial advisor cost? Fee types, typical rates and the dollar math

The short answer: how much does a financial advisor cost? Most charge a yearly percentage of the money they manage, typically 0.25%, 1% or 2%, or $250, $1,000 or $2,000 for every $100,000.

• Flat fee: for example, $500 a year for an annual review
• One-time plan: for example, $2,000 for a financial plan
• Subscription: $3, $5 or $10 a month at some robo-advisers
• True cost: the advisor's fee plus fund expenses and account fees
• Next step: Plan it with the Sinking Funds Tracker ($4.99).

How much does a financial advisor cost? Most advisers who manage your investments charge a yearly percentage of the money they manage. The SEC says those rates are typically stated as figures such as 0.25%, 1% or 2% a year, which works out to $250, $1,000 or $2,000 for every $100,000. Other advisors charge a flat yearly fee, a one-time fee for a written plan, an hourly rate, a monthly subscription or commissions on products they sell. Your true cost is the advisor's fee plus fund expenses and account fees, so always ask for the total in dollars.

Below you'll find every fee model in one table, what common percentages cost at real balances, how a fee grows over 10 to 30 years, a break-even formula for flat-fee vs. AUM, and a simple way to budget for advice. If you're still deciding who to hire, our guide on how to choose a financial advisor covers registration checks, fiduciary duty and interview questions. This page is all about the price tag.

Growing up the oldest of three in Detroit, I was the one who kept track of things for everybody, and I learned that a cost you can see in dollars is a cost you can actually decide on. A percentage hides the number. So that's how we'll look at every fee here. If you want those numbers in one place, the Sinking Funds Tracker ($4.99) helps you save ahead for a one-time planning fee, and the Annual Budget Spreadsheet ($6.99) shows what advice costs next to everything else you spend in a year.

Financial advisor fees at a glance

Here are the main ways advisors get paid. The examples come from SEC investor education materials, not from a survey of today's prices, so treat them as illustrations and ask each advisor for their own number.

The flat-fee, project-fee and commission examples come from the SEC's bulletin of top tips for selecting a financial professional. The percentages and subscription examples come from Investor.gov's bulletin on subscription-based advisory fees, which also says an asset-based fee is the most common way investment advisers charge.

How each fee model works

Percentage of assets (AUM). The adviser takes a slice of your balance each year, commonly billed at the end of each quarter. Because it's a percentage, the dollar amount rises as your account grows and falls when markets drop. Many firms use tiers, such as a higher rate on the first chunk of money and a lower rate above it. Many also set an account minimum or a minimum yearly fee.

Flat annual fee or retainer. You pay a set price for ongoing planning, and sometimes investment management, no matter how big your accounts are. Ask exactly what's included, such as tax-season check-ins, insurance reviews or help with a workplace retirement plan.

One-time plan. You pay once for a written plan, then follow it on your own. Follow-up questions usually cost extra, so ask how a second meeting is billed.

Hourly. You buy time for a specific question, like a rollover, a Social Security timing decision or a review of your current investments. Ask for a written estimate of the hours before you start.

Subscription. A small monthly charge looks cheap, but the SEC points out it can be a big percentage of a small account. Its example: a $3 monthly fee on a $500 balance adds up to $36 a year, which is more than 7% of the account.

Commission. You don't write a check, but you still pay. Commissions, sales loads on some mutual funds and annuities, and markups on bonds come out of your money or are built into the product's price.

Wrap fee. One fee covers advice and trading. Investor.gov's relationship summary page notes some people prefer a wrap fee program for the certainty of a single fee covering advisory services and commissions.

What a percentage fee costs in dollars

This is the table I wish every advisor handed out. The math is simply balance × rate.

Divide any number by 12 for a monthly figure. A 1% fee on $250,000 is about $208 a month, which is a real line in a family budget even when it comes out of the investment account instead of your checking account.

How much a financial advisor costs over time

A percentage fee doesn't just cost you this year's dollars. It also takes away the growth those dollars would have earned. Here's a simple illustration: $100,000 invested once, earning a hypothetical 5% a year before fees, with the fee subtracted from the return each year. It isn't a prediction, and it leaves out fund expenses, taxes and new deposits.

Over 30 years in this example, the gap between 0.25% and 1% is about $78,000. Between 0.25% and 1.5%, it's about $122,000. That doesn't mean the cheapest option always wins, because good advice can prevent expensive mistakes. It does mean you should know what you're buying with the difference.

How to calculate what your advisor really costs

Use these steps for your current advisor or any quote you're comparing.

1. Find the advisory fee. It's in your advisory contract, the firm's Form CRS and its Form ADV Part 2 brochure. Investor.gov's bulletin on opening an investment advisory account suggests reading the contract to see how fees are calculated and how to cancel.
2. Apply the tiers, if any. Say a firm charges 1% on the first $250,000 and 0.75% above that (a made-up schedule for this example). On $400,000, that's $2,500 + $1,125 = $3,625 a year.
3. Add fund expenses. Look up each fund's expense ratio and weight it by how much you hold. If your $400,000 portfolio averages 0.20%, that's another $800 a year.
4. Add account and transaction fees. Include custody, platform, trading and any annual account fees from the fee schedule.
5. Total it in dollars. In this example: $3,625 + $800 = $4,425 a year, or about $369 a month, which is about 1.1% of the balance.
6. Look ahead. At the same rates, the dollar fee grows as the account grows, so recheck it every year on your statement.

Flat-fee vs. AUM vs. hourly: which costs less for you?

Here's a quick break-even formula. Divide the flat fee by the percentage rate to find the balance where the two cost the same.

• A $3,000 flat fee equals a 1% AUM fee at $300,000 ($3,000 ÷ 0.01).
• A $5,000 flat fee equals a 1% fee at $500,000.
• Below the break-even balance, the percentage fee costs less in dollars. Above it, the flat fee does.

That formula only works when the services are the same. Use this table to match the model to what you need.

Investor.gov says an asset-based fee may cost more than a transaction-based fee, but you may prefer it if you want ongoing advice or want someone to make investment decisions for you. Cost and service always travel together.

Is a 1% financial advisor fee worth it?

A 1% fee can be worth it if you're getting real planning along with investment management, and if that help changes your decisions. It's harder to justify if all you get is a portfolio you could hold yourself in a few low-cost funds.

Ask yourself these questions before paying 1% or more:

• What will I get each year besides investment management? Tax planning, retirement income planning, insurance and estate reviews?
• How often will we meet, and who do I talk to?
• Would a one-time plan or an hourly review give me most of the value for less?
• Is the rate tiered or negotiable at my balance? Investor.gov notes that your services and fees depend on the contract you negotiate.

How to compare advisor quotes side by side

Put every quote on the same balance and the same line items. This keeps a lower headline rate from hiding extra costs.

For everything beyond price, like checking registration and asking about conflicts of interest, use the questions and scorecard in how to choose a financial advisor.

How to budget for financial advice

Advice is easier to afford when it's planned like any other bill. Here's how I'd set it up.

• For a one-time plan or hourly review: decide the amount, then save toward it monthly. A $2,000 plan saved over 10 months is $200 a month.
• For a flat annual fee: divide by 12 and treat it as a monthly bill, even if you pay once a year.
• For an AUM fee taken from your account: you won't see it in checking, so write the yearly dollar amount in your annual budget anyway. That keeps the cost visible when you decide whether it's still worth it.
• Review it every January. Check last year's statements for the total you actually paid.

The Sinking Funds Tracker ($4.99) works in Excel and Google Sheets. Add a "financial plan" fund with a goal and target date, and it shows what to set aside each month and how close you are. The Annual Budget Spreadsheet ($6.99) gives you a 12-month view of income, spending and savings, so a yearly advice fee sits right next to everything else. It's also the snapshot most planners ask for at a first meeting, which can help an hourly meeting go further.

Want the whole set? The Ultimate Budget Bundle ($19.99) includes six budget spreadsheets plus the Budget Planner and Bill Tracker printables. Browse every option in Spreadsheets. Prefer to start free? The Holiday Budget Starter Kit is 3 US Letter pages, emailed to you after you join our list.

When you may not need to pay for a financial advisor

You may not need paid advice yet if you're still building an emergency fund, paying off high-interest debt or getting your monthly budget to balance. A step-by-step financial order of operations can handle that stage for free. Many workplace retirement plans also include planning tools or sessions, so check what you already have before you pay.

If you'd like to invest on your own first, how to start investing walks through the basics. Then, when a bigger decision comes up, a one-time plan or a few hours of advice can be a low-cost way to get a second set of eyes.

Not sure which kind of professional you need? Our financial planner vs. financial advisor guide explains how the roles, pay and fiduciary duty differ.