Negotiate a Lower Fee
Another way to pay less is to negotiate a financial advisor's fee. Be prepared to explain why you feel it is too high and why it makes sense for the advisor to take you on as a client for less than what their firm normally charges.
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.
The primary reason a 1% advisor is a really bad deal is that you can get great advice for much less. There are a growing number of advisors charging an hourly rate or fixed fee. There's just no good reason to fork over 1% of your wealth each year to anybody for anything.
If you feel overwhelmed by financial decisions or lack the time to manage your finances, hiring a financial advisor could be worth it, even with limited funds. However, if costs are a concern, exploring lower-cost alternatives or self-education may be a more suitable approach.
Very generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could also be higher, such as $500,000, $1 million or even more.
Financial advisor fees may be negotiable. Whether you're able to get fees reduced can depend on which advisor or firm you're working with. If an advisor is willing to negotiate fees, they must specify that in their Form ADV.
Robo-advisors are typically the least expensive, followed by online financial planners. An in-person advisor will be the most expensive and may charge you more than 1 percent of your assets annually.
However, it's typically only worth paying for a financial advisor if you have at least $250,000 or more of investable assets and know that you're going to get excellent service from your financial advisor.
At Schwab, there's no cost to work with your Financial Consultant. ² There's no cost whether you're getting assistance in creating your personalized plan, or receiving tailored product recommendations and direct access to our specialists.
By hiring a single investment advisor, you receive more streamlined advice as only one person manages all your money matters removing any chance of conflicting advice or any disagreement. This also allows the chosen individual to clear up your doubts and offer guidance to you on how to best attain your financial goals.
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.
On average, you can expect to pay between 0.5% and 2% of your total assets under management annually, $150 to $400 per hour, or a flat fee ranging from $1,000 to $3,000 for a comprehensive financial plan.
In brief, consider changing financial advisors if you lose confidence in your advisor. In addition, if you're dissatisfied with your advisor's communication, you may wish to start looking for a new financial advisor. If there's a lack of transparency and trust, you should start looking for a new advisor immediately.
J.P. Morgan Personal Advisors charges between 0.50% and 0.60% of your assets under management annually. It's 0.60% for portfolios below $250,000, 0.50% for portfolios over $250,000. J.P. Morgan Personal Advisors does not charge commissions for selling investments.
Lastly, some advisors charge by the hour, similar to how a lawyer might bill you. This could be a good choice if you only need occasional advice or specific questions answered rather than ongoing management. Hourly rates for financial advisors typically range from $200 to $400 per hour.
Choosing between Edward Jones and Charles Schwab hinges on individual circumstances and financial objectives. While Edward Jones excels in personalized financial advising and strong client-advisor relationships, Charles Schwab stands out for its comprehensive range of financial services and transparent fee structures.
Vanguard National Trust Company (VNTC) can bring its fiduciary expertise and independence to serve as a professional trustee on your behalf.
Most financial advisors charge 1 percent of the AUM. A fee higher than this may be considered too high for many individuals, as it represents a significant portion of the investment returns and can impact the overall growth of the portfolio.
Swann clarifies that professional service providers—financial advisors, doctors, lawyers, teachers, veterinarians, therapists, or life coaches—should not be offered tips. Similarly, some workers cannot accept tips.
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.
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.
The Bottom Line. You cannot deduct financial management, advisor or tax preparation fees from your taxes.
This professional guidance can improve financial outcomes and provide confidence. At what point is it worth getting a financial advisor? When your financial situation becomes complex—like significant income growth, nearing retirement, or managing investments over $100,000—consider an advisor.