Wealth Protection Advisory
Fiduciary

How Much Does a Financial Advisor Cost? Fee Models & Total Cost

By Stephen Arnold··6 min read

The four fee models

ModelTypical rangeBest fit
Assets under management (AUM)0.50%–1.25%/yrOngoing wealth management
Flat planning fee$3,000–$15,000/yrComplex planning, modest assets
Hourly$250–$500/hrOne-time questions, second opinions
Commission / load1%–5.75% upfront, 0.25%–1%/yr trailProduct sales — usually not fiduciary

AUM fees in detail

Most independent fiduciary RIAs use a tiered AUM schedule. A typical example:

  • First $1M — 1.00%
  • $1M–$3M — 0.85%
  • $3M–$5M — 0.70%
  • $5M+ — 0.50% or lower

At $2M, the blended rate is approximately 0.93%, or about $18,500/year.

Hidden costs to add

  • Fund expense ratios: 0.03%–0.80%/yr depending on lineup. Index funds are at the low end; active and proprietary funds at the high end.
  • Platform / custody fees: usually nil at major custodians, but some wirehouses add 0.10%–0.25%/yr.
  • Trading costs and bid-ask: negligible at index scale; can be meaningful with thin ETFs or individual securities.
  • 12b-1 and revenue sharing: typically zero at fee-only RIAs, but common in broker-dealer accounts.

Total cost comparison

What to ask any advisor about fees

  • What is your all-in annual cost as a percentage of my portfolio?
  • Do you receive any revenue-sharing, 12b-1, or referral fees from products you recommend?
  • Will fees decline at breakpoints as my assets grow?
  • Are planning, tax coordination, and ongoing reviews included, or billed separately?
Educational only. This article is for general education and is not individualized investment, tax, or legal advice. Consult a qualified fiduciary advisor and your tax professional before acting on any strategy discussed here.
About the author

Stephen Arnold

Founder & CEO of Wealth Protection Advisory. Pension and retirement planner with 20+ years advising small business owners. Creator of the Designer DB Plus® strategy and author of Designer DB Plus® Game-Changing Tax Reduction & Retirement Strategy.

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FAQ

Frequently Asked Questions

What is the average financial advisor fee?

For ongoing wealth management, 0.50%–1.25% of assets per year is the typical range. The median for households between $1M and $5M is roughly 0.85%–1.00% with breakpoints.

What is a reasonable AUM fee?

Below $1M, 1.00% is standard. Above $1M, expect tiered breakpoints — 0.85% to $3M, 0.70% to $5M, and 0.50% or lower above $5M is common at independent fiduciary firms.

Are flat-fee or hourly advisors cheaper?

Often yes, especially for households with large portfolios and simple needs. A $7,500 flat fee on a $3M portfolio is 0.25% — well below typical AUM pricing — but does not include ongoing investment management.

What are the hidden costs to watch for?

Fund expense ratios (0.03%–0.80%), platform/custody fees (0%–0.25%), 12b-1 trail commissions, and revenue-sharing arrangements. Always ask for the all-in cost — advisory fee plus everything else.

Do commissioned advisors cost less than fee-only advisors?

Rarely on a total-cost basis. Commissions and proprietary funds typically add 1%–3% upfront and 0.30%–0.80% per year in embedded cost, more than offsetting the absence of an explicit advisory fee.

Is a 1% advisor fee too high?

It depends on what is included. 1% all-in with full planning, tax coordination, and low-cost funds is reasonable. 1% on top of 0.50% in fund expenses and a 0.20% platform fee is not.