A percentage sounds small. Put in your own numbers and see the fee as dollars this year, dollars over time, and what it does to your ending balance. No email, nothing saved. Then decide if what you get back is worth it.
Short answer
How much does a financial advisor cost?
A common fee for ongoing management is about 1% of assets a year, so the cost rises as the account grows. On $500,000 that is about $5,000 this year. Over 20 years at an 8% return, a 1% fee leaves the ending balance about 18% lower. Flat and hourly fees work differently, and this calculator tests both.
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Illustration only, not investment advice. Assumes the constant yearly return you set, contributions added once a year, and the fee taken from the balance at the end of each year. Real returns vary and are never guaranteed. “Total cost” is how much lower the ending balance is: the fees paid plus the growth those dollars would have earned. It is not a sum the advisor collects. Excludes fund expenses, trading costs and taxes.
A fee buys nothing by itself. It is worth paying when what it delivers is bigger than what it costs. Three plain cases:
You do the work yourself and you stay put in bad markets. Then most of this number is money you can keep. Plenty of people are in this group, and they should hear it.
You get real planning for it. Taxes coordinated, a plan you actually follow, someone who stops you from selling at the bottom. Then the fee can pay for itself. Vanguard’s research estimates that good advice can add about 3% a year in net returns, and says plainly that it arrives unevenly and varies by client.
You pay it and get a portfolio and one call a year. Then you are paying a planning price for an investing service. Ask what else is included, or ask for a lower fee.
Value per unit of fee. Not the fee alone.
Not sure which one you are? The other half of the math is a 19-question quiz about how you actually behave with money. It can tell you to keep your money. Take the quiz →
What going alone costs you against what the fee costs. Some people get told to keep their money.
Five questions to run on any advisor, fund or app, including mine.
A common fee for ongoing management is about 1% of assets a year. In one survey of about 1,000 advisors, the median was 1% on accounts up to $1 million, a little higher on small accounts and lower on large ones. On $500,000 that is about $5,000 a year. Others charge a flat yearly fee, an hourly rate, or a one-time fee for a plan.
In this page’s example, $500,000 growing at 8% for 20 years ends near $2,330,000 with no fee and near $1,906,000 with a 1% fee. About $219,000 goes out as fees, and the ending balance is about $424,000 lower, roughly 18%, because fee dollars stop compounding. Returns are never guaranteed; this is an illustration.
It depends on the size of the account. A flat $7,500 a year is 1.5% of $500,000 but 0.5% of $1.5 million. A percentage fee grows with the account and a flat fee does not. The calculator lets you test both on your own numbers.
Only if what you get back is worth more than what it costs. That depends on your situation and on what the advisor actually does for you: planning, tax coordination, and keeping you invested in bad markets. This page shows the cost side. The 19-question quiz covers the other side.
If the number says you are overpaying for what you get, that is useful. If it says you are getting fair value, that is useful too.
Who I work with: founders, business owners and families who want one fee-only advisor for the whole picture. Investment management is 1% a year on the first $1 million, lower above that; ongoing planning with investment management is $7,500 a year, or the asset-based fee if higher. Not ready for that? The Starter Plan is a one-time plan from $1,500.
Questions people ask
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