Income Level: Many people consider hiring a financial advisor when their income reaches around $100000 or more annually, as this often correlates with more complex financial needs.
However, as a general guideline, many people consider engaging a financial advisor when they have substantial assets or when they encounter financial decisions that require specialized expertise beyond their own knowledge.
Life events. Graduating college, getting married, expanding your family and starting a business are some major life events that might cause you to reevaluate your financial situation. A financial advisor can help you manage these life events while making sure you get or stay on track.
(1) If you have custody of client funds or securities, you must maintain at all times a minimum net worth of $35,000. (2) If you have discretionary authority over client funds or securities but do not have custody of client funds or securities, you must maintain at all times a minimum net worth of $10,000.
But you don't always need to be wealthy to access or benefit from financial advising. There are many types of advisors, and most investors can likely find one who works for their specific situation. In fact, many advisors have no minimum at all, or if they do, it might be lower than you expect.
Paying a 1% annual fee to a financial advisor for managing a $2 million investment portfolio is pretty typical, but that doesn't necessarily mean it's the right amount for every investor. Even small-sounding financial advisor fees can seriously erode long-term returns when compounded over years or decades.
Not everyone needs a financial advisor. If your finances are straightforward, you might manage on your own with some research. However, if your situation involves complex investments, planning for retirement, or significant life changes, professional advice can be beneficial.
There's no universal milestone — whether it's age, career stage or income level — that signals when you should hire a financial advisor. However, if your financial situation has grown more complex than simply managing paychecks and expenses, it may be time to consider one.
You're Confident Managing Your Own Investments
If you are comfortable selecting and managing your own investments, you may not need a financial advisor. Perhaps you follow the markets closely and do your own research on potential investments.
Not all banks have financial advisors, while other banks may offer you free financial advice under certain circumstances. While most large banks offer full-service products for banking, lending, investing and insurance, other banks may not.
No matter your financial situation, professional advice is accessible to help you build a secure future. By asking the right questions and understanding your options, you can find an advisor who aligns with your future goals and current budget.
Cash-on-hand guidelines you could use:
Experts generally recommend having enough cash to cover 3–6 months of living expenses in an easily accessible account, such as a high-yield savings account. This safety net can act as a buffer against unexpected expenses like job loss, medical bills or car repairs.
Gross advisory fee applicable to accounts managed through Fidelity® Strategic Disciplines ranges from 0.20% to 0.49% and gross advisory fee applicable to accounts managed through Fidelity® Wealth Services ranges from 0.50%–1.04%, in each case based on a minimum investment of $2 million.
Hiring a financial advisor can seem like an unnecessary expense but they often save you money in the long run. If you choose to hire a financial advisor, make sure all their fees are transparent before you sign. A financial advisor is usually recommended when their fee is less than what they save for you.
The management fee varies but usually ranges anywhere from 0.20% to 2.00%, depending on factors such as management style and size of the investment.
The Bottom Line. You cannot deduct financial management, advisor or tax preparation fees from your taxes.
Once you have investable assets over $1M, it's definitely time to start speaking with advisory firms to see how they can help you optimize your investments. It's also important to ensure you're not overpaying your taxes or missing out on other wealth-planning opportunities.
Some traditional financial advisors have minimum investment amounts they require to work with clients. These can range from $20,000 to $500,000 or even more. Why? Because their fees need to cover their time and expertise, and managing smaller portfolios may not be cost-effective for them.
Industry standards show that financial advisor fees generally range between 0.5% and 1.5% of AUM annually. Placement of a 2% fee may appear steep compared to this average. However, this fee might encompass more comprehensive services or cater to more unique, high-maintenance portfolios.
Whether you should consider working with more than one advisor can depend on your overall goals and financial situation. If you're fairly new to investing and you haven't built up a sizable net worth yet, for instance then one advisor may be sufficient to meet your needs.
Most advisors charge a 0.25 to 1 percent fee to manage your assets, though some may charge an hourly rate of $200 to $500, and others may offer an annual retainer of $7,000 or more. Be sure to watch out for advisors that earn commissions based on what products they get you to invest in.
Edward Jones serves as an investment advice fiduciary at the plan level and provides educational services at both the plan and participant levels, if applicable.