Calculator Use
This financial advisor cost calculator is designed to provide transparency into the various ways financial professionals charge for their services. Understanding these costs is critical for long-term wealth building, as fees can significantly impact your portfolio's growth over several decades.
Whether you are working with a traditional wealth manager or a fee-only planner, you can use this tool to compare different pricing models. Simply select your advisor's fee structure and enter the requested data to see your total annual and monthly obligations.
- Percentage of Assets (AUM)
- This is the most common model where the advisor takes a percentage of the money they manage for you. Typically ranges from 0.50% to 1.50%.
- Hourly Rate
- Used by many financial planners for specific projects or one-time consultations. Rates often range between $150 and $400 per hour.
- Fixed/Flat Annual Fee
- A subscription or retainer-style model where you pay a set dollar amount regardless of your asset size or the number of hours worked.
How It Works
The financial advisor cost calculator applies basic arithmetic based on the billing method you select. While some advisors use complex "tiered" pricing (e.g., 1% on the first million, 0.75% on the next), using an average effective rate will provide a very close estimate of your actual costs.
AUM Cost = (Total Assets) × (Annual Percentage / 100)
- Assets: The total value of all accounts managed by the professional.
- Rate: The agreed-upon annual fee percentage.
- Frequency: Most AUM fees are deducted quarterly, but our calculator shows the annual aggregate for easier budgeting.
Calculation Example
Scenario: You have a retirement portfolio worth $750,000. Your advisor charges a standard 1% AUM fee. You want to know the impact over the next year.
Step-by-step solution:
- Input Assets = $750,000
- Input Annual Fee = 1% (or 0.01 in decimal form)
- Calculate: $750,000 × 0.01 = $7,500
- Monthly Cost: $7,500 / 12 = $625
- 10-Year Cost: $7,500 × 10 = $75,000 (excluding market growth)
Common Questions
What is a "Fee-Only" Financial Advisor?
A fee-only advisor is paid directly by the client and does not receive commissions for selling specific financial products (like insurance or mutual funds). This model is often preferred because it reduces conflicts of interest. The financial advisor cost calculator is particularly useful for these transparent billing models.
Is a 1% fee too high?
A 1% fee is considered the industry standard for traditional wealth management. However, as your assets grow (e.g., above $2 million), many investors look for "break-points" where the percentage drops to 0.75% or 0.50%, or they switch to a flat-fee model to cap their expenses.
Does the cost include fund expenses?
No. Usually, the "advisor fee" is separate from the "expense ratios" of the underlying investments (like ETFs or mutual funds). To find your total cost of investing, you would need to add those internal fund expenses to the result provided by this financial advisor cost calculator.