What Types of Financial Advisor Fees & Investment Fees Should You Expect to Pay in 2019-2020?
Most people have no problem with the idea of getting expert financial advice to help manage or invest their money, but when it comes to the financial planner fees tied to it, there can be a lot of confusion and trepidation.
AdvisoryHQ News often receives questions like “how much does a financial advisor cost”? “Where can I view a financial advisor fees comparison?” or “what are independent financial advisor fees in 2019?”
AdvisoryHQ News ranks the best advisory firms each year in our Top Financial Advisors and Best Wealth Managers in the US & UK rankings, and during that process, we gain a good overall picture of the average advisory fees for financial planning and investment management fees for a particular year.
If you’re planning to work with a financial professional in 2019 or in 2020, it’s important to know what the average financial advisor fees are and what is considered high or low. Otherwise, you might end up paying more than you need to for financial advice.
Typical Financial Advisor Fees 2019
It’s not unusual to be confused when looking over a website or brochure for an investment manager or financial advisor. Depending on the types of services you decide to get, there can be many different types of fees attached and financial advisory firms may use different names for the same types of fees.
The types of fees you pay for financial & investment guidance can include:
- Wealth management fees
- Asset management fees
- Financial management fees
- Investment advisor fees
- Money management fees
- Managed account fees
- CFP fees
- Fund management fees
- Portfolio management fees
Don’t Miss: How to Reduce Your Investment Management Fees
There can also be a completely different type of wealth management fees structure from one financial advisory firm to another.
How do you make sense of it all?
That’s what AdvisoryHQ is here to help you with. We’ll take a close look at financial advisor fees from multiple firms around the United States and break down all the different types of costs for you, so you’ll have a better idea of the average investment management fees to expect.
We’ll give you the financial advisor fees average and do a wealth management fees comparison, with highs and lows, to increase your financial know-how and prepare you for getting the best deal when negotiating investment advisory fees with a firm.
Read on before you sign up with a new investment manager or financial planner to ensure you don’t end up paying too much in financial advisory fees.
Finding Financial Management Company Fees for Comparisons
Most good financial management firms will have their financial advisory fees or investment fees and expenses listed transparently on their website.
The standard way they present advisory fees is through a “fee structure.”
To do a proper financial advisor fees comparison, you’ll want to understand what a basic fee structure looks like and how to find it. That way you’ll know you’re comparing “apples to apples” when doing an investment management fees comparison to find the best firm to work with.
An average financial planning fees structure will be presented in a table or listing that will include two main columns:
- The account balance or range of a client’s assets under management
- The corresponding percentage or flat rate that’s charged annual in financial planner fees
Please note that this standard financial advisory fees table might not include additional fees, such as investment fees, which may be based upon the products you choose for your portfolio.
You’ll usually find a firm’s typical wealth management fees or money manager fees on their website under “fees,” “info,” or possibly on the “FAQ” page of their site.
You can also reference a firm’s Form ADV, which is a standard Securities and Exchange Commission (SEC) form used by investment advisors for registration with the SEC. This is a helpful way to find fees and do an investment fees comparison between financial advisors.
Once you have the details on the typical financial planner fees for a certain firm, you can compare their costs with the average investment advisory fees presented in this report below to see if a firm is higher or lower than average.
Sample Asset Management Fees Structure
The figures above are examples only and used to illustrate what typical fees for financial advisors and their structure looks like.
Please see the sections below for actual figures of average asset management fees, financial advisor fees, and investment fees.
Average Financial Advisor Fees & Costs | 2019-2020 Report
To find out how much a financial advisor will cost you in 2019-2020, click any of the links below to jump directly to the specific type of advisory fees that you would like to compare.
Financial Advisor Fees Breakdown:
- Investment Management Fees | (Asset Under Management)
- Typical Financial Planner Fees: Fixed/Flat Rates
- Average Financial Advisor Fees: Hourly Rates
- Average Financial Advisor Fees: Annual Retainer
- Asset Management Fees: Package Fees
- Money Management Fees: Hybrid Fee Structure
- Average Financial Advisor Income Per Client (AUM)
AdvisoryHQ’s Research Methodology to Determine Average Financial Advisor Fees
How did the AdvisoryHQ research team determine the average financial planning and investment advisor fees presented in this article?
To determine the typical asset management fees across different U.S. states, our research team spent time reviewing a wide range of investment advisor fees charged by multiple firms.
The team looked at typical money management fees across states in the Eastern, Western, Southern, Midwestern, and Northern regions of the U.S. In addition to location, the team also compared financial advisor fees averages based on firm sizes, and investment fees based on financial and retirement planning services.
The team’s objective was to identify the average, median, and typical financial planner fees charged across the investment and financial planning industry.
Please note that it is impossible for the team or any other team/firm to review the fees being charged by every wealth advisor that operates in the U.S., however, we feel our sampling gives an accurate picture of investment management fees averages.
In determining the financial advisor fee averages presented in this report, we used a random sampling approach in selecting the advisory firms whose fees were included in our dataset population.
The team’s random sampling approach was based on a fundamental principle called equal probability of selection: when every financial advisor across the U.S. has an equal probability of being selected in a sample dataset, then that sample dataset will be representative of the entire financial advisory population.
This is similar to how election polls are conducted today, in which a set number of people (e.g., 1,000 people) are polled to get a national average.
Factors that Impact the Typical Investment Advisory Fees
There are a number of different factors that can impact the fee you’ll pay a financial advisory firm. Whether you pay the lowest investment fees or the highest is not only dictated by the firm you work with, it’s also based upon your financial circumstances.
Following, are some of the determining factors for investment advisor fees.
How Much Money You’re Investing
Generally, fees for financial advisors are scaled so that the more money you’re investing, the better deal you get on the fees. Those that are investing less than $500,000, for example, can expect to pay a higher fee (in most cases) than someone investing $5,000,000.
The Services You Want
Often, you’ll get a choice of options that will impact the overall money management fee you’ll pay. For example, you might choose to have just a financial plan put together and that’s it. Or you might decide you’d like the firm to handle the implementation for you.
Managed account fees will, of course, be higher than if you’re taking a “do-it-yourself” approach. For higher net-worth individuals, firms also offer special concierge-type financial services that are paid for as needed or via a retainer structure.
How Complex Your Finances Are
Typical financial advisor fees average higher the more complex your finances are. If you own several pieces of property and your own business, you’ll most likely pay more in advisory fees than a couple that only owns one house and is just starting their investment journey.
What Do You Get for the Money Management Fees You’re Paying? Is it All-Inclusive?
The typical financial advisor fees that you’ll pay will cover basic services and managing of your portfolio, but won’t cover some charges, such as those having to do with certain products within your portfolio.
Here’s what fees for financial advisors typically cover:
- Financial plan
- Guidance on how to achieve your financial plan
- Ongoing financial management with semi-annual or annual reviews and adjustments
These are fees that are typically additional to the money manager fees:
- Fees for ETFs or Mutual Funds (commissions, 12b-1 fees, load fees)
- CPF fees for more active portfolio management
- Additional services fees (business or CPA services or online account management tools)
According to Investopedia, if you have mutual funds or ETFs in your portfolio there are some of the typical additional charges beyond your standard fund management fees that you can expect.
- Load Fees: Load fees are charged on mutual funds are generally between 3.0 and 8.5%.
- Brokerage Commissions: Rather than load fees, ETFs will typically have a per trade broker commission, which ranges between $8 to $10.
- 12b-1 Fees: This is a fee that covers things like advertising and distribution, is charged on mutual funds, and is typically between 0.25% and 0.75%.
Investment Management Fees | Percentage of AUM (Asset Under Management)
When you’re doing a financial advisor fees comparison, you’ll find that the most common fee structure imposes charging an annual percentage of your assets under management.
You’ll often see this in financial management company fees charts listed as “x%/AUM.” It’s pretty straight forward as far as fees structures go. For instance, if the total assets you were having a financial advisory firm handle was $500,000 and they charged 1.2% AUM, your annual fee would be $6,000.
One detail to check when doing a wealth management fees comparison with firms charging a percentage of AUM is how they prorate or handle the advisor fees when your total assets under management change, either increasing or decreasing.
Since this is the most common method for charging portfolio management fees, firms have a standard method they use for the adjustment, but it’s good for you to know ahead of time, so you’ll understand how the average advisory fees can change as AUM changes.
What are the average investment management fees for a percentage of assets under management? In the table below, we’ve averaged the last three years, including 2019, to give you an idea of typical wealth management fees across the United States.
These average investment advisory fees were documented based on a random sampling of a wide range of wealth advisors, RIAs, certified financial planners (CFPs), and asset management firms.
Average Financial Advisor Fees (AUM)
Average Advisor Fees (%)
Annual Advisor Averages
% of Assets Under Management
As you can see, financial planner fees usually range from 0.59% to 1.18% using the percentage of AUM fee method. The lowest investment fees are for the higher end investments in excess of $10 million.
The average asset management fees presented above correlate with Investopedia’s typical fees for financial advisors, noted in their 2019 article, “How to Cut Financial Advisor Expenses,” which states that an average financial planner fee would be 1.02% of AUM for an account of one million dollars.
CFP fees for those investing at the low end of $50,000, pay on average 1.18% per year, or $590.00. While the most affluent see the lowest investment advisor fees, at 0.59%, or $177,000 per year, on accounts with $30,000,000 in assets being managed.
AdvisoryHQ Financial Advisor Fees Average
The average financial advisor fees presented in this comparison report reflect administrative fees (record keeping, accounting services, trading, etc.) and overall management costs (ongoing due diligence, monitoring, tax management, portfolio rebalancing, ongoing investment advice, and financial planning).
However, the fees above do not cover expenses for any mutual, index, or exchange-traded funds you may own within your account.
According to Bloomberg News, below are additional fees that you might end up paying for mutual/index funds and exchange traded funds (ETFs) within your account.
- Actively managed mutual funds: 0.65% of the value of the fund per year for bond funds and 0.89 percent for equity funds.
- Index mutual funds: 0.12% of assets per year for equity funds and 0.11% for bond funds.
- Exchange-traded funds: 0.5% of assets (average expense ratio for U.S. non-leveraged ETFs)
Typical Financial Planner Fees | Fixed/Flat Rate Based on AUM
When doing an investment fees comparison, the flat rate, or fixed, fee-based on AUM is not too different from the percentage, but rather than basing your wealth management fees structure by percentage, you’ll have the fee rounded to a fixed fee bucket.
So, depending upon whether you’re at the low end of the range or the high end, a flat rate schedule for investment fees and expenses may save you money or cost you more.
It really depends upon the fixed advisory fee and how it compares to the calculated percentage when you take your AUM into consideration.
Flat rate financial planner fees usually range from $7,500 (if you have between $1 to $499.99 to invest) up to $55,000 (if you are investing over $7.5 million).
Here is a table and graph-based upon our research of the average financial planning fees when done as a fixed rate based upon assets under management.
Average Fixed Fees (Annual Fees Per AUM)
Typical Investment Advisory Fees – Fixed
Investment Management Fees Comparison | Percentage vs Fixed
Let’s take three examples below of different AUM figures and calculate the wealth management fees comparison between percentage and fixed rates.
Average Annual Investment Fees | AUM of $62,000
- Percentage-based: $731.60
- Fixed-rate: $7,500
Average Annual Investment Fees | AUM of $1,200,000
- Percentage-based: $12,240
- Fixed-rate: $12,500
Average Annual Investment Fees | AUM of 7,600,000
- Percentage-based: $58,520
- Fixed-rate: $55,000
2019-2020 Financial Advisor Fees Comparison
Based upon the comparison of percentage or fixed financial management fees based on AUM, the smaller overall account you have to manage, the more you’ll save with a percentage-based rather than flat-rate fee schedule, as per the averages.
Average Financial Advisor Fees | Per Hour
Another fee structure that’s used by financial advisors is charging by the hour, based upon the time they spend managing your account, rather than the value of your assets under management.
Typically, the firms that use the hourly rate for their asset management fees are open to servicing all income levels and charge hourly in order to make wealth management affordable for all types of clients.
This allows people to buy only the time they need for financial guidance, and work on their finances a little bit at a time as is affordable for their budget.
Average hourly investment advisor fees can vary according to geographical location, but the typical range is between $120-$300 an hour.
Here are two examples below for money management fees from different parts of the United States.
Remedios Financial Planning in San Francisco, CA charges $150 per hour for financial pre-planning work and $300 per hour for financial planning. Average times involved for each activity, include:
- Mapping out goals for savings and debt repayment (0.5 hours)
- Collaborative budget creation (1.5 hours)
- Check accomplishments (45 minutes)
- Limited scope financial planning (6 hours)
- Deeper dive financial planning (12-20 hours)
Jim MacKay Financial Planning in Springfield, MO has by-the-hour investment advisor fees of $225 per hour for a wide range of financial planning activities from estate planning to portfolio risk/reward analysis.
They also offer ongoing services for a quarterly flat fee, which is common with firms offering hourly financial advisory fees. Typically, the hourly rate is charged for one-time services, whereas the flat or percentage rates are charged for ongoing management.
What types of services are great for by-the-hour managed account fees?
- A debt management strategy
- A financial plan
- Estate planning
- Portfolio health review
- Investment advice
- Retirement planning strategies
- Structuring tax strategies
- Social Security strategies
- Review of investments in a 401(k)
- Discussing major life changes
- Investment review for do-it-yourselfers
If you want someone to work with you in an ongoing capacity on your financial management, then hourly could get expensive, and flat rate or percentage arrangements may save you money.
Average Financial Advisor Fees | Annual Retainer
The annual retainer is somewhat similar to the flat rate by AUM, except it is not only based on your investable assets, but also on the complexity of your finances.
When comparing the financial advisor fees average between a percentage or flat rate of your AUM with an annual retainer, you need to take into consideration the type of services you want, because an annual retainer can potentially have access to more services that the firm offers.
For example, Lawrence Financial Planning in Tampa, FL charges a $6,000 annual retainer for new clients and explains that clients “have access to us throughout the year for financial assistance.”
Asset Management Fees | Package Fees
To offer an easy “one-stop-shop” for financial management and make it simple for people of all income levels to invest, you’ll see packages for financial planning that group-specific services together for one flat fee.
There is no standard financial advisor fees average for packages because financial advisory firms will design packages distinct to their clients, services that the firm offers, and the complexity of their work.
To give you a better idea of what you might pay for a “package deal” when it comes to financial management, let’s take a look at some package financial planner fees from Merit Financial Partners, LLC, located in CT and NY.
- Comprehensive Financial Planning: $2,000 – $4,500
- Retirement Planning: $1,500 – $2,500
- Asset Allocation/Portfolio Guidance: $800 – $1,200
- Tax Planning: $1,100 – $1,800
- College Planning: $275 – $1,500
Money Management Fees | Hybrid Fee Structure
It’s not unusual to see financial advisory firms utilizing more than one fee structure. This “hybrid” model could offer clients a choice between hourly investment fees and using a percentage of their AUM. It that case, the fee structure may change based upon the types of services you want.
An example would be Mainstreet Planning, a financial advisor with five offices throughout the U.S. The firm uses both hourly financial management fees for topic-specific help ($400/hour) and package fees for more full-service needs.
Investment Fees Comparison Example | Mainstreet Planning
If you’re working with a firm that has hybrid investment advisor fees, you’ll want to be sure to compare and contrast each fee structure and potential AUM values before you commit to one or the other, to ensure you’re getting the option with the lowest investment fees.
Average Financial Advisor Income Per Client (AUM)
How much does a financial advisor make from their clients’ typical wealth management fees?
It can vary according to whether they are a fee-only or a fee-based advisor (see below), but industry averages for the annual income earned per client are in the following table.
|Investment Amounts||Average Fees (%)||Annual AUM Income|
Table: Average Financial Advisor Income Per Client (AUM)
Financial advisors are generally fee-only or fee-based, and it’s an important distinction and may impact the recommendations they make or the average financial advisor fees that you’re charged. Here is an overview of each type.
- Fee-only: Fee-only financial advisors are only paid in client fees and do not accept commission from 3rd-party companies that sell financial products. This type of financial advisor garners a certain level of trust due to avoiding some conflicts of interest.
- Fee-based: Fee-based advisors earn money from client fees and may also accept commissions for sales of financial products. Due to the inherent conflict of interest, many fee-based advisors are fiduciaries, legally obligated to act in a client’s best interest.
How to Reduce Your Investment Management Fees
Many people wonder how they can reduce their typical financial advisor fees while still getting the benefit of good financial guidance. Another popular question is whether there is an IRA management fees deductible you can take on taxes.
Next, we’ll go through tips for reducing investment fees and expenses related to financial management and what current tax deductions are available for IRA fees. Here are a few strategies for reducing your average advisory fees.
Use a Robo-Advisor
A cheaper way to get investment help is to use a robo-advisor. While you won’t get any human interaction or the benefits that come with years of hard-earned advisory experience, you will pay significantly less in financial planner fees.
Robo-advisors are accessed via an online interface and they use an automated investment algorithm and advanced software to help you build and manage an investment portfolio.
Typical robo-advisor fees range between 0.25% and 0.50% of your account balance per year.
Take a DIY Approach to Investment Management
If you just need someone to get you started down the right financial path, and then you can take it from there, a DIY approach to the management of your portfolio will help you reduce asset management fees.
Many financial advisory firms will price their financial planning services and wealth management services separately, so you can choose how much help you need, and pay accordingly.
Having them put together a financial plan for you that you then implement on your own can offer you a discount from an overall ongoing management fee model.
The best way to ensure you’re getting the best price possible is to do an investment fees comparison between companies. Make sure you’re taking into consideration the type of fee structure used – percentage, flat rate, package, hourly – and calculate out the dollar amounts.
You’ll also want to take the services you’re receiving into consideration so you’re not directly comparing a cheaper price with far fewer services to higher investment fees that offer more robust management.
It’s good to get at least 3 to 5 firms for a thorough investment management fees comparison to make sure your bases are covered both for the services you need and the best value for your money.
IRA Management Fees Deductible
Investors that used to rely on deductions to help offset investment and money manager fees, had some bad news when the Tax Cuts and Jobs Act came into effect in 2018. The new tax law eliminated the deduction for investment expenses.
According to the IRS, “Investment fees, custodial fees, trust administration fees, and other expenses you paid for managing your investments that produce taxable income are miscellaneous itemized deductions and are no longer deductible.”
There may be hope on the horizon, however, because the portfolio management fees and IRA management fee deductible is only currently eliminated through 2025, so there’s a chance it could come back.
Wealth Management Account Minimums
As part of their offerings, wealth management and financial advisory firms normally require a minimum account size. Minimum new account size varies widely across the wealth management industry.
Some wealth managers require a $3,000,000 minimum. Others are much lower and only require $150,000.
Online asset managers (i.e., robo-advisors), on average, require an extremely low minimum account size. However, they do not provide the human touch, comprehensive services, and customized relationship approach provided by your regular wealth management firm.
So, depending on the asset manager you choose, you can expect a minimum account size requirement starting from $0 (robo-advisors) and reaching as high as $10,000,000 (highly exclusive wealth managers).
Conclusion | Average Financial Advisor Fees for 2019-2020
Over the past few years, investment and money management fees have been fairly steady. The biggest changes we’ve seen are reflected in more options that investors have when it comes to average investment management fees and the elimination of the tax deduction for these fees.
Financial advisors have become more creative in how management company fees are presented. While using a percentage of assets under management is still the most popular fee structure, firms are now offering more packages, hourly, and hybrid options.
This opens the possibility of financial management services to more people, even those with fewer assets, to invest initially. So, it’s a positive development and one that encourages competitive pricing when it comes to the average investment advisory fees.
With all the different fee options you have, the most important thing is to compare investment and fund management fees carefully, considering all add-on fees and the services you get so you can find the best fit for your unique needs and also the best deal for your wallet.
AdvisoryHQ (AHQ) Disclaimer: Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info. Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.
AdvisoryHQ (AHQ) Disclaimer:
Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.
Additional sources: https://www.investopedia.com/articles/investing/102915/why-are-etf-fees-lower-mutual-funds.asp
If you have any questions about this AdvisoryHQ article, don’t hesitate to email us to let us know: Contact AdvisoryHQ today.