How much do financial advisors charge?

When considering fees, know that costs can vary significantly based on the type of advisor and services offered. While opting for a robo-advisor (which often charges between 0.25% and 0.75% of your annual account balance) can save you money if your financial situation is straightforward, those whose finances are more complicated or people craving more guidance might be charged 1% to 1.50% of their account balance for an in-person advisor.

Is there a difference between a financial “advisor” and “adviser”?

The term “adviser” is considered an older and more traditional spelling of the same word; the U.S. Investment Advisers Act of 1940 in fact used it to refer to anyone earning a fee for making investment recommendations or conducting securities analyses (and was thus required to register with the SEC or his/her state). These two terms are used interchangeably today and refer to the same type of financial professionals.

How are financial advisors paid?

Financial advisors utilize various fee structures, either charging a flat fee regardless of services provided, a percentage of investment assets managed, or by the hour. Other advisors are paid high commissions for selling products, which naturally results in a conflict of interest. Want to feel confident that your financial advisor isn’t offering biased advice so he/she can receive product commissions? Team up with a professional who has CFP® credentials and is thus held to a fiduciary standard.

How to Find and Choose a Financial Advisor in 7 Steps

Many seemingly simple decisions in life can radically impact your future happiness, choosing a financial advisor one such example. How should you go about finding “the one”? This article is a great place to start.

Key Takeaways

Start by pinpointing your needs—debt, investing, estate planning, and/or full coordination—as advisor types differ, with brokers, robo-advisors, investment advisors, financial planners, and wealth managers all offering different services.
Know the difference between advice and a sales pitch; a registered investment advisor (RIA) is a fiduciary who’s legally bound to put your interests first whereas brokers follow a looser standard with the ability to earn commissions.
Prioritize CFP® designation, the industry's most recognized credential requiring a rigorous exam and fiduciary standard; similar designations such as ChFC and CRPC don't carry the same prerequisite.
Vet the advisor and firm by using FINRA's BrokerCheck and the SEC website to review disciplinary history, refer to the Form ADV for fees and conflicts, and confirm an independent custodian holds your assets.
Use your free initial consultation to build rapport, narrowing your options to two or three advisors and then asking how they're compensated, about services offered, and whether they collaborate with CPAs and attorneys.

1. Pinpoint your financial needs.

Know what you’re looking for before embarking on your search. For example, do you need help managing debt or simply some guidance when it comes to investing? Perhaps you’re looking to develop an estate plan or want to make sure your entire financial team is in sync. Understanding your pain points can save you time and help narrow your search as different advisors don’t always offer or focus on the same services.

2. Familiarize yourself with different types of financial advisors.

Financial advisors will help you manage your money and reach your financial goals in diverse ways, making it instrumental to know how these professionals differ. Let’s explore some of these differences…

At a glance

The five most common types of financial advisors

Most financial professionals fall into one of five categories. The deep-dives below explain each in detail; this is the quick orientation.

Type	What they do	Best for
Broker	Buys and sells securities at your direction	Self-directed investors who only need execution
Robo-advisor	Algorithmic portfolio management with low fees	Novice or hands-off investors with basic needs
Investment advisor	Manages portfolios and provides investment advice	Investors wanting active, personalized management
Financial planner	Broader guidance across savings, insurance, taxes, and investments	Anyone seeking integrated financial planning
Wealth manager	Hybrid of investment advisor and financial planner	High-net-worth and ultra-high-net-worth clients

Brokers

Only looking to buy and sell securities such as stocks and bonds? You’ll need a broker, essentially an intermediary between investors and a securities exchange. In doing so, you can choose between full-service outfits (e.g., Morgan Stanley, Stifel, or Merrill Lynch) and their discount counterparts such as E-Trade or Robinhood. While the latter charge lower fees and commissions, they require you make investment decisions on your own whereas full-service brokers provide personalized investment advice.

Robo-advisors

Also known as “automated investment advisors,” these online platforms offer computer-generated financial planning and investment services. Betterment and Wealthfront are two of the more popular examples, with robo-advisors best suited for novice investors who don’t have a lot to lose, people with basic investment-management needs, and investors looking to pay as little as possible (since they’re relatively inexpensive). Some of these platforms also provide access to a human financial advisor.

Investment advisors

Simply put, these advisors provide clients with investment advice while managing their investment portfolios for a fee. While this option is more expensive than a robo-advisor, it offers more personalized service and access to additional types of investments.

Financial planners

Financial planners offer much broader services than investments alone, integrating numerous financial components—spanning savings, insurance, and taxes—to fulfill both short- and long-term aspirations.

Wealth managers

Representing a hybrid of investment advisors and financial planners, wealth managers primarily serve high-net-worth and ultra-high-net-worth clients.

While some very clear distinctions exist between the types of professionals discussed herein, keep in mind that roles often overlap as well (e.g., many financial planners also offer investment advice and management services). Either which way, you should have a clearer picture of what to look for now that you’re familiar with different types of financial advisors and the unique services they offer.

3. Know the difference between getting advice vs. being sold to.

Watch out

“Financial advisor” is a loose term — not all are fiduciaries

Anyone can call themselves a “financial advisor,” but only a fraction are legally bound to put your interests above their own. The distinction comes down to which standard they operate under:

Fiduciary (RIA standard): Legally required to put your interests first throughout the relationship. Can’t accept commissions from product sales. This is the standard Registered Investment Advisors (RIAs) follow.
Best Interest (Reg BI standard): Required to act in your best interest at the moment of each specific recommendation. Can accept commissions from products they sell you. This is the standard broker-dealers follow.

The difference matters. A fiduciary’s duty applies every day, in every conversation. A broker’s applies only at the point of each specific recommendation. The same person can wear either hat — which is why it’s worth asking directly.

How to confirm: Ask whether the firm is a Registered Investment Advisor (RIA) and whether they accept commissions from product sales. You can also check the firm’s Form ADV on the SEC website.

4. Research a financial advisor’s credentials.

When selecting a financial advisor, prioritize credentials since not all designations carry the same weight. Choosing an advisor with a CFP® designation—the industry’s most recognized and respected credential—is recommended since CFPs® are regulated by the Certified Financial Planner Board of Standards. To earn this designation, advisors must pass a comprehensive exam and meet strict education and experience requirements. CFPs® are also legally required to uphold a fiduciary standard, putting your best interests first.

Comparing professional designations

When searching for a CFP®—either through Google or the CFP® Board’s online database—you may see other credentials as well. Take time to understand how these differ from a CFP® (click here to explore professional designations). For example, a chartered financial consultant (ChFC) completes a curriculum similar to a CFP® but with additional electives; this designation is less rigorous, however, since it doesn’t require an exam. A chartered retirement planning counselor (CRPC), meanwhile, focuses on retirement planning whereas a CFP® provides comprehensive financial guidance across all aspects of an individual’s finances (including retirement). Both ChFCs and CRPCs aren’t held to a fiduciary standard.

5. Vet a financial advisor’s background.

In addition to checking credentials, thoroughly review an advisor’s professional background: investigating if he or she has left a previous firm due to disciplinary issues or is currently facing any regulatory actions. Uncovering any red flags should prompt you to look deeper or reconsider your relationship with the advisor. You can use BrokerCheck—a tool provided by FINRA, the self-regulatory organization that oversees broker-dealers and their registered representatives—and the U.S. Securities and Exchange Commission (SEC) website to do this, both resources allowing you to search for financial advisors and review potential disciplinary actions/complaints.

6. Learn more about the financial advisor’s employer.

With a list of potential financial advisors in hand, you’ll want to do some homework on their respective firms to avoid buyer’s remorse. Key details to consider include…

Firm disclosures

Firm disclosures outline critical operational details and other information to help you narrow your search. For registered investment advisors (RIAs), visit the SEC or applicable state website to obtain a free copy of their Form ADV: a document detailing the firm’s services, fees, and background. FINRA’s BrokerCheck tool offers comparable background information for broker-dealer firms. Focus on understanding the firm’s business model and identifying any potential conflicts of interest (e.g., the sale of proprietary products or services). No matter the fee structure—fee-based, commission-based, subscription, or otherwise—be sure to fully understand what you’re paying for and check for any disciplinary actions against the firm, looking elsewhere if you find any. Also note which custodian (a bank, brokerage or trust company that holds and safeguards a client’s assets) the firm uses, ideally a reputable and independent third party to ensure transparency and security.

Organizational structure

It’s also wise to confirm that other CFP® professionals work at the firm; should your advisor leave and you choose to stay, qualified professionals will still support you in that case.

Ease of doing business

When considering a firm, know that some have minimum investment or net-worth requirements for new clients: thresholds that can vary widely and limit your options if you fail to meet them. Also inquire whether the firm offers introductory services (beyond an initial consultation) so you can experience its approach before committing to a long-term relationship. This is a low-risk way to get to know the firm and feel out a good fit for your needs.

Transparency

Transparency goes beyond what’s disclosed in the firm’s ADV. Evaluate how open and clear the firm is about its costs, checking its website: Is it easy to find detailed pricing for various services? Are fee schedules, minimums, and other charges laid out in plain language? True transparency means charges should never surprise you and you should never feel unsure about what you’re receiving for your money.

7. Build rapport with a financial advisor.

One rule of thumb to never underestimate is your level of comfort with an advisor. Many firms and advisors offer free initial consultations for this same reason, so be sure to take advantage of this opportunity and shop around after narrowing your list to two or three options.

Before you sign

7 questions to ask any financial advisor before hiring them

“What services do you provide?” Confirms the advisor’s range actually covers what you need.
“Do you offer any introductory services so I can work with you before fully committing?” A trial engagement is the lowest-risk way to evaluate fit.
“How are you compensated?” Reveals potential conflicts of interest and ensures you’re comfortable with the fee structure.
“Will you consider assets you aren’t directly managing?” An integrated approach is far more valuable than one focused only on the assets you hand over.
“Do you work with CPAs or estate attorneys?” Advisors who coordinate with other professionals deliver better-integrated advice, especially for complex situations.
“How will you determine which investments are right for me?” Tells you whether recommendations are tailored to your goals and risk tolerance, or one-size-fits-all.
“Who is your custodian?” Independent third-party custody adds security and transparency. Your advisor should not be directly holding your assets.

Additional tips for finding a financial advisor near you

You can begin by using an online financial advisor-matching service or checking with professional organizations (e.g., the Financial Planning Association), though your options may be limited in that case since advisors pay to join such networks. We instead recommend kicking off your search by asking your social network for recommendations or using online tools such as the CFP Board website, which allows you to search by location, client focus, and/or preferred language.

In sum: how to find and choose a financial advisor

Whether you’re primarily seeking investment advice or need help with retirement planning, choosing the right financial advisor calls for a holistic approach that not only considers the advisor’s track record but also your client-advisor rapport. After all, when you find “the one,” you want that relationship to last a lifetime and give you a fruitful experience.

Vision Retirement offers FREE discovery calls with CFP® professionals. Schedule an appointment to learn if our expertise is a good fit for your needs.

Reviewed for accuracy

Paul Muller, AEP®, CFP®

Founder and Relationship Manager at Vision Retirement, with 25+ years in the financial industry.

Read full bio →

FAQs

When considering fees, know that costs can vary significantly based on the type of advisor and services offered. While opting for a robo-advisor (which often charges between 0.25% and 0.75% of your annual account balance) can save you money if your financial situation is straightforward, those whose finances are more complicated or people craving more guidance might be charged 1% to 1.50% of their account balance for an in-person advisor.
The term “adviser” is considered an older and more traditional spelling of the same word; the U.S. Investment Advisers Act of 1940 in fact used it to refer to anyone earning a fee for making investment recommendations or conducting securities analyses (and was thus required to register with the SEC or his/her state). These two terms are used interchangeably today and refer to the same type of financial professionals.
Financial advisors utilize various fee structures, either charging a flat fee regardless of services provided, a percentage of investment assets managed, or by the hour. Other advisors are paid high commissions for selling products, which naturally results in a conflict of interest. Want to feel confident that your financial advisor isn’t offering biased advice so he/she can receive product commissions? Team up with a professional who has CFP® credentials and is thus held to a fiduciary standard.