What Does a Financial Advisor Cost?

What Does a Financial Advisor Cost?

⚒️Resources⚒️

Free Masterclass On How to Increase Income In Retirement By Up To 30%: https://app.thepeakfp.com/free-training

If you prefer to read the full blog post you can find it here:
https://www.thepeakfp.com/blog/flat-fee-financial-advisor

1:45 what is a flat fee financial advisor?

2:15 What dictates the fee amount?

2:40 Are Flat Fee Advisors Fiduciaries?

4:33 Services Covered by a flat fee

5:23 Lets talk dollars - how much does everything cost?

let's talk $s. what should you expect financial advice to cost and how do you compare across the different methods that advisors charge.

because there's really no standard way that ALL advisors charge, arriving at an average $ amount is really difficult.

but to set your expectations, flat fee advisors will typically charge somewhere between $2,000-$10,000+ per year. The lower the fee, the less complex the project, and vice versa.

Outside of the flat fee space, advisors may charge in the following ways:

Asset management fees across the industry range from .25% to as high as 2% of assets under management.
In exchange for those fees you'll receive investment management services and occasionally some financial planning or financial advice. More often than not under an AUM fees arrangement the scope of work will be limited to investment management without any financial planning services.
also, Many financial advisors have asset minimums - meaning they will not take on clients who have account values below a certain amount.

I did a whole video explaining how commission or fee based advisors work - you can go watch that for more details.
but the quick summary is that To this day many financial advisors are still paid via commissions based upon the investments they recommend to clients (although this is quickly going out of fashion).

Estimating the cost of commissions is very difficult - the industry is very opaque and it is usually not until you actually have a contract for those investment products and have read the fine print that you will be aware of the cost to you

Retainer services refer to a set monthly or annual fee -
usually This is another form of the flat fee model where a portion of the fee may be paid up front as a retainer with the balance being paid in quarterly or monthly installments.
The cost is usually unrelated to how much money you have available to invest, but may increase based on the complexity of your situation.

like the flat fee model, retainer based services typically cost between $2,000-$10,000+ per year.

Some financial advisors (such as those under the Garrett Planning Network) charge an hourly rate similar to an attorney or accountant.
The average rate is somewhere between $200-$500 per hour.
This structure is useful if you do not need an ongoing planning relationship but have one-off questions that need answering. Topics like saving for college, setting up self employed retirement accounts, or setting up a budget are common examples.

Occasionally an advisor will charge a flat fee for creating a financial plan that does not include any assistance with implementation, ongoing management, or oversight.

The cost ranges from around $1,000 - $3,000 and may be otherwise known as "project based" planning.
You'll receive the plan and be expected to carry out and execute on your own.

this is likely the be the cheapest method to obtain a financial plan or financial advice given that you'll really be on your own for most of the critical work that comes once you receive the recommendations in the plan.

I hope you found this video helpful and look forward to seeing you in the next one!