What Are Appropriate Financial Advisor Fees in 2025?
- Mike Rogers
- May 14
- 6 min read
Updated: May 29
How much do financial advisors cost? And what is an appropriate financial advisor fee?
Financial advisor fees can vary widely depending on the services they provide, the advisor's experience, and their business model. One common fee structure is for advisors to charge a percentage of the assets they manage on your behalf. This AUM fee often ranges from about 0.5% to 2% per year. With fiduciary financial advisors, it’s most common that your cost is an AUM fee that decreases as your assets under management goes up.
Mike Rogers is a fiduciary financial advisor with over 30 years of experience in the financial services industry as an investment advisor and financial planner. He founded 360 Financial in 1995 and holds series 7 and 63 security registrations with LPL Financial.
What Should You Pay When Working with a Financial Advisor?
The appropriate fee for a financial advisor can vary widely depending on the services they provide, the advisor's experience, and their business model.
Typically, you might see fees structured as a percentage of the assets they manage for you, a flat fee for services, or an hourly rate. When you pay your advisor based on assets under management, i.e. AUM, your costs will come off your invested assets automatically.
In other words, you won’t have to cut a check for your advisor at the end of the year.
With fiduciary financial advisors, it’s most common that your cost is an AUM fee that decreases as your assets under management goes up.
For example, if you have $1M in AUM, then your fee might be 1.2%. However, if you have $3M in AUM, then your fee might be .95%. If you’re paying based on AUM, it’s important to make sure that there aren’t any hidden fees, such as kickbacks to the advisor based on selling you certain commission-based products.
If you’re working with a fiduciary financial advisor, then this isn’t something that you have to worry about, as they are legally obligated to act in your best interest at all times.
Common Financial Advisor Fee Structures
Fee Structure | Typical Range | Notes |
AUM (Assets Under Management) | 0.5% – 2% annually | Fees often decrease as assets increase; includes ongoing management. |
Flat Fee | $1,000 – $5,000/year | Usually does not include ongoing investment management. |
Hourly Rate | $200 – $400/hour | Best for DIY investors or specific financial questions. |
Fee Structures Explained
There are three common fee structures that financial advisors use:
Percentage of assets under management (AUM)
Flat fee
Hourly rate
While a % of AUM is the most common, we're going to cover all three fee structures.
1 - Percentage of Assets Managed
One common method is for advisors to charge a percentage of the assets they manage on your behalf.
This rate often ranges from about 0.5% to 2% per year. For example, if an advisor manages $1,000,000 for you and charges a 1.2% fee, you would pay $12,000 annually for their services. This model aligns the advisor's incentive with your success; if your assets grow, they earn more, which motivates them to keep your portfolio growing.
In addition, as your wealth grows, you typically have a much more complex financial picture that requires more frequent meetings and financial planning.
Typically, if you have $1M or more in assets under management with an advisory firm, you’ll get a financial plan as a complimentary service. If you are working with a wealth management firm that has tax and estate planning specialists, then as part of your service, you will also receive tax planning services and estate planning guidance.
Typically, the greater your assets under management the more value you extract from your advisory team.
As the complexity of your financial situation goes up, there is a greater likelihood that you will be significantly under optimized should you try to manage everything on your own.
2 - Flat Fee
Another option is a flat fee structure.
This is like paying a set price for a specific service package, regardless of your asset size. This might be appealing if you want financial planning advice without tying the cost to your investment amount. For instance, the advisor might charge $2,000 per year for services such as investment advice, retirement planning, and regular check-ins.
It should be noted that you’re unlikely to find someone who will manage your investments for you for a flat fee. A flat-fee structure is more typical with a financial planner who gives you a plan that you will need to execute on your own.
3 - Hourly Rate
Lastly, some advisors charge by the hour, similar to how a lawyer might bill you.
This could be a good choice if you only need occasional advice or specific questions answered rather than ongoing management. Hourly rates for financial advisors typically range from $200 to $400 per hour.
Which Fee Structure Is Right for You?
Choosing the right fee structure depends on your needs.
If you have $1M or more of investments and want continuous management, a percentage-based fee will likely make the most sense. However, if you're just starting out or have a simpler financial situation, a flat fee or hourly rate might be more cost-effective.
It's also important to consider what you're getting for your fee.
A good financial advisor will not only manage your investments but also help you with financial planning, setting goals, and making informed financial decisions.
For example at 360 Financial, a Wealth Management firm that helps clients across the U.S., every client receives a LifeWealth Plan that is aligned with their vision and values.
Clients get support with their tax planning, financial planning, retirement planning, and estate planning as well as guidance when figuring out health insurance and long-term care.
This suite of services means that you’re never wondering if you’re going to be okay when you stop working. You’ve got a comprehensive plan that takes every single aspect of your financial and family life into account.
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Common Questions
What is a typical financial advisor fee?
It depends on how the advisor charges, but a common fee is 1-2% of assets under management each year. Some advisors charge less as your portfolio grows, while others may offer flat fees or hourly rates. According to a study by Envestnet, 62% of advisors charge a percentage of assets under management.
Is a 1% fee for a financial advisor worth it?
If you’re getting ongoing investment management, financial planning, tax strategy, estate planning, and guidance on big-picture decisions, a 1% fee can be well worth it. The key is making sure you're actually getting value beyond just portfolio management. The more complex your finances, the more value you get for your 1% cost.
Is a 1% management fee high?
A 1% fee is quite standard in the industry, especially if you have $1 million or less invested. Some firms offer lower rates as your assets increase, so it’s worth asking how a firm’s fee schedule works.
Is paying a financial advisor worth it?
If you’re navigating big life decisions, tax planning, or retirement strategy, having a financial advisor can be worth it in the short and long term. The right advisor can help you avoid costly mistakes and will seek to ensure your financial life stays on track. A financial advisor can also help you with tax strategies that ultimately save you money.
Final Thoughts
There's no one-size-fits-all answer to what an appropriate fee for a financial advisor should be.
It will depend on your financial situation, the type of services you require, and how you prefer to pay for those services. Understanding the different fee structures and comparing what is included in those fees will help you make an informed decision that aligns with your financial goals.
Remember, the cheapest option isn't always the best, especially if it means receiving a lower level of service or expertise that could cost you in the long run.
Make sure you understand what services are included and that you feel the value justifies the cost.
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About the Author
Mike Rogers
Mike Rogers is the founder and president of Minnesota-based financial advisory firm 360 Financial. As the founder, Mike’s priority is that 360 Financial always serves the clients with empathy, integrity, and honesty. This customized, client-centric approach allows the firm to help clients decipher between the things they can control and what truly matters.
In other words, Mike understands that money is not the end-all-be-all; instead, it’s the “how” that fuels the “why” to the question: “What’s important to you?”
