The main ways financial advisors charge
| Fee model | How it works | Often fits |
|---|---|---|
| Assets under management | A percentage of the portfolio, usually billed quarterly | Ongoing planning plus delegated investment management |
| Flat annual fee | A set dollar amount each year | Ongoing advice when portfolio size is not the best measure of work |
| Project fee | One price for a defined plan or decision | Retirement plans, second opinions, or a specific transition |
| Hourly | Pay for time used | Targeted questions and occasional reviews |
| Subscription | Monthly or quarterly recurring payment | People who want access and planning without large investable assets |
| Commission | Compensation from a product sale or transaction | Specific insurance or brokerage products, with conflicts understood |
What does a 1% fee cost?
A 1% fee equals $2,500 a year on $250,000, $5,000 on $500,000, and $10,000 on $1 million before considering fund expenses or portfolio growth. Because the fee is usually recalculated as the account changes, the long-term dollar total can be much larger than multiplying the starting fee by the number of years.
Use the financial advisor fee calculator to model your own assets, fee, return, and time horizon.
Why two “1% advisors” can cost different amounts
Some schedules are tiered, so the percentage falls on assets above certain thresholds. Others apply one rate to the entire balance. Advisors may also manage only part of your assets, charge separately for planning, or recommend investments with their own expense ratios.
What should be included?
Ongoing fees may include investment management, retirement projections, tax planning, insurance review, estate coordination, cash-flow work, and regular meetings. Ask for a service calendar that shows what happens throughout a typical year—not just a list of possible services.
Is a financial advisor worth the fee?
That depends on the work you need and the result you can reasonably expect—not whether the advisor can promise to beat the market. Valuable advice might reduce a tax mistake, improve retirement timing, simplify a complex estate, keep a plan on track, or return time you do not want to spend managing everything yourself.
Compare scope, incentives, and cost
- Define the decisions and ongoing work you want help with.
- Get the all-in first-year dollar cost from each firm.
- Ask what is included, who performs the work, and how often it happens.
- Compare ongoing management with project, hourly, or advice-only alternatives.
- Review the arrangement again when your needs change.
Next, generate your own advisor fee and interview questions.