Yes, it's generally considered better to have a fee-only financial advisor because they act as fiduciaries, legally bound to your best interests, avoiding conflicts of interest from commissions on products, which aligns their incentives with yours for more objective, transparent, and comprehensive financial planning. While some potential conflicts remain (like incentivizing higher AUM), fee-only advisors offer greater clarity and focus on holistic advice rather than product sales, though they might have higher upfront costs or require coordinating with other professionals for certain services.
A major drawback of fee-only financial advisors is their limited access to commission-based products like certain insurance or annuities, meaning clients often need to work with separate professionals for those needs, adding complexity and coordination. Additionally, fees (like AUM) can be higher upfront or costly for small accounts, potentially feeling like sticker shock, even if long-term value is present.
Fee-only financial planners charge in several ways: hourly (around $200-$400), flat fees for specific plans (often $1,000-$5,000+), monthly/annual retainers (e.g., $215/month or $2,500-$9,200/year), or as a percentage of assets (typically 0.5% to 1.2% AUM). Costs vary significantly based on the planner's experience, your wealth, geographic location, and the comprehensiveness of services, from basic guidance to full wealth management.
To clarify, fee-only advisors accept payment only from their clients and do not accept commissions or recommend investments with hidden 12b-1 fees. They are the only type of advisor that should be considered fiduciaries.
If you're asking when you should get a financial advisor, consider these signs that you're ready: Your net worth exceeds $100,000 to $250,000, and managing your finances feels overwhelming. You're facing a major life event, such as marriage, divorce, or retirement.
Three leading wealth advisors recently shared their top ideas with Bloomberg, and I've taken them a bit further to help you put them into action.
From what I've seen, a few signs stand out: There was a major merger or acquisition involving your investment advisor. You've had internal changes - the people that made prior decisions are no longer there (or there are about to be significant transitions) Performance has been unexplainable and/or consistently bad.
The Top Five Reasons Consumers Aren't Hiring Financial Advisors
A fee-only advisor, by contrast, only receives compensation from the fees they charge you. They don't get paid from commissions. Working with a fee-only advisor can help ensure that the financial advice you receive is in your best interest, without the potential conflicts associated with commission-based sales.
Without quality leads, you can't close deals. And without closing deals, there are no new clients to service — which means no revenue and career growth. Eventually, these advisors quit.
Seek professional advice
Of high-net-worth individuals, 74 percent work with a financial advisor. Compare that to just 34 percent in the general population. In addition, 60 percent of millionaires consider financial advisors to be their most trusted source of financial advice by far.
The "27.39 rule" (often rounded to $27.40) is a simple financial strategy to save $10,000 in one year by consistently setting aside $27.40 every single day, making it an achievable micro-saving habit to build wealth or an emergency fund. It turns the daunting goal of saving $10,000 into a manageable daily action, emphasizing consistency over large lump sums.
Only a small percentage of Americans retire with $1 million or more in retirement savings, with figures from the Federal Reserve and Employee Benefit Research Institute (EBRI) showing around 3.2% of retirees hitting that mark, though some sources cite slightly lower numbers for all Americans (around 2.5%) or higher estimates for households nearing retirement (over 10% of older households have $1M+ net worth, not just retirement funds). The reality is most retirees have significantly less, with the median for ages 65-74 being around $200,000-$609,000 in retirement accounts.
I tell young people all the time, by the time you hit 33 years old you should have at least $100,000 saved somewhere. Make that your goal. That's the age when it's really time to start getting FOCUSED on saving.