How Much Does It Cost to Work with a Fee-Only Financial Planner?

There are several important steps in the process of evaluating financial advisors. One of them is determining the cost to work with them.

It can be a challenge to compare apples-to-apples when evaluating different financial advisors because their compensation methods can vary widely. For this reason, it is critical to receive and review the full written disclosure about their compensation structure before you enter into an agreement with anyone. Also spend the time needed to ask the questions you need answered to completely understand the potential dollars spent under different scenarios.

Below we outline some of the most common compensation structures for financial advisors.

Percentage of Assets (Fee-Only)

One of the most common ways to compensate financial advisorsis via a percentage of the assets that they manage or advise. For example, if the advisor charges a 1% annual advisory fee on $100,000 of assets, then the annual advisory fee would be $10,000, which is deducted from one of your accounts (or you can cut a check). The percentage that an advisor assesses can vary but will typically range from 0.5% to 2.0%. Fee-only advisors may also tier their fees so that the percentage declines as assets under management rise.


Another way for financial advisors to get paid is through product commissions. Usually these come in the form of a percentage fee on the total value of the product sold. For example, the advisor may invest your $100,000 investment portfolio in a series of mutual funds each with 5% “front-end loads” or fees. This means that 5%, or $5,000, is deducted up-front from your $100,000 investment purchase (i.e., only $95,000 is invested in the mutual funds). The remaining $5,000 goes to your financial advisor as compensation. Mutual funds can also be “back-end loaded,” which means that, using the prior example, the full $100,000 is invested up front but the $5,000 is withdrawn as compensation on the back end when the funds are sold.

Fee-Based (Percentage of Assets + Commissions)

It is important to distinguish fee-only from fee-based financial advisors. To summarize, fee-based financial advisors may assess a smaller annual advisory fee as well as get paid on investment and insurance product commissions.


Financial advisors may simply charge a set monthly fee or a regular retainer. With this compensation structure, the fee is standardized and is not explicitly tied to assets under management or time spent with you (though it is highly likely that the retainer fee implicitly factors in these components). For this reason, you will want to understand how and when the advisor can renegotiate retainer fees.


You may also find financial advisors willing to accept hourly compensation. This can be potentially an advantageous compensation structure if you less frequently require assistance for certain financial needs or you feel comfortable implementing certain components of your financial plan on your own. But hourly compensation will almost certainly be more expensive if you require full-service financial planning on an ongoing basis.

When it comes to your evaluating financial advisors, it is critical to take the time to evaluate how they are compensated and how that translates to your bottom line in dollars and cents. The above compensation structures will give you a head start in understanding what to look for during your vetting process.

About Us: Modera is proudly a fee-only and independently owned financial planning firm that acts as a fiduciary for our clients. We have built our organization to put our clients’ interests first.

Call Modera and our Atlanta financial advisors to learn more and set up an initial meeting with our team.

Modera Wealth Management, LLC (“Modera”) is an SEC-registered investment advisor with places of business in Massachusetts, New Jersey, Pennsylvania, North Carolina, Georgia, and Florida. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. SEC registration does not imply any level of skill or training.  For information pertaining to our registration status, fees and services, please contact us or refer to the Investment Adviser Public Disclosure website ( to obtain a copy of our disclosure statement set forth in Form ADV Part 2A. Please read the disclosure statement carefully before you invest or send money.

Author bio: I’m Jaylin: Guest post service planner of Leelija and full-time blogger. Favorite things include my camera, traveling, caring my fitness, food and my fashion. Email id:

Comments are closed.