While the typical annual financial advisor fee is thought to be 1%, according to a 2023 study by Advisory HQ, the average financial advisor fee is 0.59% to 1.18% per year. However, rates typically decrease the more money you invest.
According to the U.S. Bureau of Labor Statistics, the median annual wage for personal financial advisors was $94,170 in May 2021. It means half of the financial advisors earned more than that, and half earned less. One in ten earned less than $47,570, while one in ten made more than $208,000. A fun fact!
Oftentimes, financial advisors require minimum investment thresholds so that 1% fee can cover their costs to manage your money. After all, 1% of a $100,000 minimum means they only earn $1,000 in a year from your account.
Most financial advisors charge based on how much money they manage for you. That fee can range from 0.25% to 2% per year. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website.
While a 1% annual fee may seem like a small price to pay for professional investment guidance and financial planning, it can significantly erode portfolio returns over long time horizons. Even seemingly minor differences in fees add up in a big way when compounded year after year for decades.
Around 60%, or the majority, of financial advisors with more than five years of experience will earn over $100,000 annually and up to $300,000. At the higher end, $300,000, puts the advisor in the top 10% of household income in the United States, which is not bad at all.
Advisors at wirehouses typically earn a base salary plus bonuses based on assets under management (AUM) growth and sales goals. Total pay packages generally range from $100k for junior advisors up to $300-500k for senior advisors managing over $100 million in AUM.
In addition, millionaires are much more likely to work with a financial advisor (69%), more than double the amount of the general population (33%).
Achieving a seven-figure income as a financial advisor is possible but not typical. Adhering to industry regulations and ethics is crucial while striving for high income.
Depending on the net worth advisor you choose, you generally should consider hiring an advisor when you have between $50,000 - $1,000,000, but most prefer to start working with clients when they have between $100,000 - $500,000 in liquid assets.
They will first need to earn a bachelor's degree in accounting, business management, finance or a closely related field. Applicants looking to further enhance their qualifications should consider a master's degree in accounting, attainable online.
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.
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.
Source: 2021 Fidelity Investor Insights Study. Furthermore, industry studies estimate that professional financial advice can add up to 5.1% to portfolio returns over the long term, depending on the time period and how returns are calculated.
On average, financial advisors charge between 0.59% and 1.18% of assets under management for their asset management. At 1%, an advisor's fee is well within the industry average. Whether that fee is too much or just right depends entirely on what you think of the advisor's services and performance.
Millionaires don't worry about FDIC insurance. Their money is held in their name and not the name of the custodial private bank. Other millionaires have safe deposit boxes full of cash denominated in many different currencies.
However, in general, it's wise to start working with a financial advisor or wealth management team once you've built a nest egg of $1M in investable assets.
Seek professional advice
Of high-net-worth individuals, 69 percent work with a financial advisor. Compare that to just 33 percent in the general population.
If your investable assets are under $250,000, it's likely best to seek help from a financial planner and invest on your own until you build up a larger nest egg. The simple reason is that you get more value from your advisory firm as your assets grow and your financial situation becomes more complex.
The average return is going to vary from year to year, based on the activity in the market. Studies have shown that financial advisors have the potential to add, on average, between 1.5% and 4% to your portfolio above what the average person is able to get as a return on their own.
A bachelor's degree or higher in any discipline from an accredited college or university is required for CFP® certification.
According to the Bureau of Labor Statistics (BLS), the median annual salary for a financial advisor was $99,580 as of May 2023, significantly above the national average of $65,470. However, salaries can vary greatly depending on location, experience and the advisor's client base.
It also takes considerable time and effort to build a clientele and is considered a high-stress job by many, even in the best of times.