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Hiring a financial advisor is a great way to get a handle on your finances and start making better financial decisions. Your financial advisor will work alongside you to evaluate your current financial situation and recommend steps you should take to reach your goals.

Some people hesitate to reach out to a financial advisor due to uncertainty over the fees they charge or the perception that they are only for the very rich. But working with a financial advisor is one way to have the best money year — regardless of your income level. This guide will break down financial advisor fees and costs to better understand how much financial advisors charge.

What is a financial advisor?

A financial advisor is a professional who offers a range of services aimed at helping clients manage their finances better. Financial advisors may recommend investments and strategies, make comprehensive financial plans and manage investment portfolios for their clients. They can also help you prioritize certain financial goals or adjust your finances after a major life transition, such as a divorce or retirement.

How much does a financial advisor cost?

Several factors play a role in determining the cost of working with a financial advisor. A major factor, however, is whether you choose a human advisor or a robo-advisor.

Human advisors

If you want to work directly with an actual person on your finances, you should look for a human financial advisor. Advisors generally work under one of three types of payment structure: fee-only, fee-based and commission-based.

Fee-only advisors

Fee-only advisors make money by charging a flat fee, which can be an hourly fee or a fee based on how much money they manage for you — also known as an assets under management (AUM) fee. They don't make any money from commissions.

You can expect to pay around $2,000 to $7,500 per year as a retainer for your financial advisor’s services if they charge a flat annual fee. In exchange, you’ll typically get comprehensive investment management and asset planning throughout the year.

Financial advisors who charge hourly rates generally charge between $200 and $400 per hour. In this fee structure, you only pay for the time you spend working with the advisor. Your advisor typically won’t provide additional oversight over your investments or assets unless you pay for extra time.

AUM fees for traditional in-person financial advisors are typically around 1% of the assets the advisor manages for you. For example, if you hire a financial advisor to manage $500,000 in assets, the advisor would likely charge you about $5,000 over the year. Advisors who charge for their services using AUM fees may not take on clients with balances under a set amount like $250,000.

Fee-based advisors

Fee-based advisors are similar to fee-only advisors in that they also charge their clients AUM, hourly or flat fees for their services. The key difference is that fee-based advisors also get paid from other sources like commissions.

Don’t assume that fee-based advisors are always more expensive than fee-only advisors simply because they charge commissions. Costs vary, and neither fee-based nor fee-only advisors are automatically more affordable than the other.

Commission-based advisors

Some financial advisors get paid via commissions on the financial products they recommend to each client. Commission-based financial advisors make their money exclusively from commissions. When they recommend certain investments, they receive payments. For mutual funds, expect your financial advisor’s commission to fall between 3% and 6% of the value of your investment, for example. Those fees come out of your pocket.

Some people worry about working with financial advisors who make money through commissions due to potential conflicts of interest. Registered investment advisors do have to disclose any potential conflict of interest in writing to their clients, but if it’s still a concern, you can simply choose a fee-based advisor instead of a commission-based advisor.

Fee-only advisors make their money on client fees alone. That said, advisors who work for fees tend to be more expensive than commission-based advisors. Keep these differences in mind when you’re deciding how to choose a financial advisor.


Robo-advisors are automated digital tools that offer clients financial advice or directly manage their finances with little human intervention. They rely on software, data and advanced algorithms to provide insights about your finances and help you reach your financial goals. Most robo-advisors offer a range of investing services, including investment rebalancing and tax optimization.

Robo-advisors offer the most affordable services because they only provide investment management. Robo-advisor fees can be as low as 0.25% of the assets the robo-advisor manages for you, up to 0.50% or higher. If you manage $100,000 in assets through a robo-advisor, for example, a 0.25% AUM fee would only be $250 per year.

Using a robo-advisor typically isn’t a perfect substitute for working with a human financial advisor, however. Some people prefer the human element of building professional relationships with their financial advisors.

Online financial planning tools

Some online wealth management platforms, such as Empower (formerly known as Personal Capital), can act as alternatives to working directly with a financial advisor. Other platforms, such as Zoe, put you in touch with advisors. These tools are digital, like robo-advisors, but offer more comprehensive services beyond investment management. They charge either a flat annual fee (starting at around $1,000 per year) or an AUM fee — typically between 0.3% and 1%.

You can also consider free financial counseling services from reputable non-profits if you can’t afford the costs of hiring a financial advisor. Just be cautious of anyone claiming to be a free financial advisor since scammers use this tactic to gain access to sensitive financial information.

How to find a financial advisor

If you decide you need a financial advisor, try these methods to find a qualified financial advisor near you:

  • Ask family and friends for recommendations. A personal recommendation from someone you know and trust is arguably the ideal way to find a financial advisor. Ask your family and friends if they can refer you to a financial advisor whose services meet their expectations.
  • Use a search engine. Don’t overlook searching for a personal financial advisor through search engines. You may search “financial advisor near me” or “certified financial advisor in [your location]” to find top results in your area. Searching online will also make reading reviews and learning more about each advisor's services easy.
  • Check the National Association of Personal Finance Advisors. The NAPFA website allows you to search for fee-only fiduciary financial planners by zip code or location.
  • Search the CFP Board. Similarly, the CFP Board website has a feature that allows you to find certified financial planners based on your location and the planning services you’re interested in. Examples of planning services you can search for include tax planning, small business planning and estate planning.
  • Work with a robo-advisor that offers advisor access. Many robo-advisors include access to human financial advisors as part of your fees. For people who only need a few questions answered and do a lot of their financial management themselves, this can be a great option.
  • Choose an online financial advisor. If you can’t find a local financial advisor, you can look for one who provides services entirely over the internet. These financial advisors can help you regardless of where you’re located in the country.

Important questions to ask a financial advisor

When deciding which financial advisor to hire, it’s a good idea to prepare a list of questions for your top candidates to help you better understand their services. You can ask each candidate the following questions:

What are your qualifications?

Anyone can claim to be a financial advisor, but if you’re trusting someone to help you make important financial decisions, you want them to have qualifications backing up their expertise.

Generally, financial advisors need at least a business-related bachelor’s degree and some on-the-job training to begin working in the field. Many financial planners pursue additional degrees after graduating, such as a master’s degree in finance or business administration.

Some financial advisors also have professional certifications like certified financial planners, chartered financial analysts and chartered financial consultants. These certifications show that the financial advisor has specialized knowledge in a niche like tax and retirement.
Financial planners sometimes must register with the Securities and Exchange Commission or obtain state licenses to practice. For instance, if the financial planner directly buys and sells certain stocks and bonds, they may need more credentials.

Ask financial advisors about how long they’ve worked in the field and the ways they’re qualified to help you. If one of the financial advisor’s qualifications doesn’t seem related to the services you’re interested in, that’s a sign a different financial planner might be the better choice.

What's your fee structure?

You should ask financial advisors about their fee structures up front, so there aren’t any cost-related surprises down the line. Going with a financial advisor who charges a flat fee may be the way to go if you want to know how much you'll pay at the outset.

Are you a fiduciary?

Ask any financial advisors you might work with whether they are fiduciaries. A fiduciary manages another party’s assets and has a legal and ethical obligation to put that party’s interests, in this case, yours, ahead of their own. Financial advisors may or may not be fiduciaries, but certified financial planners and registered investment advisors are always fiduciaries.

Knowing whether your advisor is a fiduciary is important because fiduciaries have a higher standard of care. You don’t have to eliminate any advisors who aren’t fiduciaries from your list of potential choices, but it is something to keep in mind.

What other costs should I expect to pay?

Financial advisors should also tell you if there are any other costs associated with the services they provide. If they don’t, remember to ask whether you must worry about other charges.

Some advisors may not include fees on the investments you choose in their advisory fees. You need a complete picture of the charges you may incur with each financial advisor to find one worth the money.

Financial advisor vs. financial planner

It’s easy to confuse financial advisors and planners since people often use the two terms interchangeably.

Financial planners are a subset of financial advisors. They specialize in creating a detailed plan that helps you tackle your long-term financial goals.

Financial planners may or may not manage your investments as part of their services. Some specialize in particular areas of financial planning, such as divorce planning or retirement planning. If you’re specifically interested in learning the best money moves for events in your future, a financial planner may be what you’re looking for.

Is a financial advisor really worth it?

If you’re struggling with a financial decision and want the help of a professional, working with a financial advisor can be a great investment in your future. If, on the other hand, you’re already hitting your financial goals, the financial advisor fees may not be worth it. Here are some points to consider as you weigh the pros and cons of paying for financial guidance:

  • Financial advisors help you manage your finances, including investments, savings, and goals.
  • Pay attention to each financial advisor's fee structure — fee-only, fee-based or commission-only.
  • Consider expanding your search beyond human advisors to robo-advisors and online financial planning tools.
  • Compare quotes from multiple advisors to find the best option for your goals and budget.