Nervous about the cost of working with a financial advisor?
I understand. A financial advisor sounds fancy and expensive. I wish there was a flat rate I could give you, for financial advisors everywhere so that it could be simple. Unfortunately, the cost of working with a financial professional varies drastically.
When you have your first meeting with an advisor, and they get to know your financial situation and financial needs, they should be able to give you an estimate. Although I cannot give you an exact number, I can tell you what my process looks like, to give you some reference
I get paid in one of three ways:
- Through an assets under management fee. This means that whatever you have invested under my management, I receive 1% of that.
- Through a finders fee. This applies to insurance or an annuity. It you put your money into a fixed index annuity, you are essentially paying them with time. You will sign a contract saying you will leave your money untouched for a certain amount of time. Let’s say 10 years. They benefit by having your money as a stability for them. I get paid for being the middle man between you and the investment. The state would handle that fee and you wouldn’t see it coming out of your money. The only way you will be charged is if you break your contract and take money out before the 10 years is up.
- Through a flat rate. Let’s say that you are a very independent person, and want to be in full control of your finances, but just need a push in the right direction. I can create a customized financial plan and give it to you for a flat fee, and you take it and follow it by yourself.
As I always say, this is not a one size fits all. You must ask good, clarifying questions before you commit to working with an advisor. If they cannot tell you what price range you’re looking at, I strongly suggest finding someone else to work with.