Whether you're preparing for retirement, saving for college, or investing, you'll need someone who can go beyond simple budgeting to get the best results. That's where a financial advisor comes in.
Even when you go shopping, the first thing you do is check out the prices and compare one product to another. Why?
Because you want to get the best deal. It's the same with finding a financial advisor. You want to know: How much does it cost to have a financial advisor? With many years of experience and knowledge, it’s most useful to think about the cost of their financial expertise as part of your investment.
With the right financial planner in Arizona, discussing financial needs and investments with a local should be easy — but the good ones will always come with a fee that suits your needs and compensates them for their expertise. When you are looking at how much does a financial advisor cost, you are looking for the best value for your money. This hourly fee or flat fee will vary somewhat depending on the financial products and services you get.
Financial Advisor Fee Structures in Arizona
Figuring out how much to pay for financial planning and advice is like translating a foreign language. When you’re asking, “how much does a financial advisor cost?” you need to think about the carrying fee structures. Knowing different financial fees in Arizona could be tricky, but worth your time.
We'll help you better understand more about fee structures in Arizona using data gathered from the top eight financial advisors in the area.
One notable takeaway from these financial companies is that most employ the same fee structure.
Another point worth noting: the minimum asset investment in Phoenix is relatively low and flexible in the $0 to $25,000 range, as compared to Scottsdale, with a minimum amount of $100,000.
But before we dive in let's take a look at how fee structures may differ:
- Asset-Based: The most common fee that advisors charge where they get a percentage of your assets under management (AUM).
- Hourly Rates: fees charged for one-time projects or consultation sessions.
- Fixed Fees: Comprehensive payment scheme that you can pay either monthly or annually.
- Commission-Based: Conservative type of fee but you'll always know how much they're making from your investment.
- Performance-based: Your success is the advisor's success. They get paid if you make more money than the projected investment gains.
It's natural to feel some hesitation about fees. The important thing is you're getting the best financial advice for the price, which is part of your successful investment strategy.
How Much Do Financial Advisors Typically Charge?
The truth is there's no fixed price to what financial advisors charge. Each of them has a unique pricing structure. So, to find the answer to the question “how much does a financial advisor cost per year?”, you will need to look at the individual firms.
There are 2,168 financial advisors in Arizona who earn a mid-range living when compared to the highest-paid advisors in New York, with an average annual income of $166,100 (based on 10 years). This means that there are still a lot of financial advisors who charge well above or below the average.
If you are worried about being overcharged, don’t worry. When thinking about how much a financial advisor costs per hour, remember that you can still hire a financial advisor that fits into your budget.
For more detail, here's a quick run-down as to how much a certified financial planner costs:
- AUM fees are at 1-1.2% if the asset value is under $50,000
- Average flat-rate fee is $7,500 for investments under $500,000
- Average hourly cost ranges from $100 to $300
If you're in Arizona, financial advisor fees are regulated by-law to ensure clients get a fair and reasonable price. Don’t let them overprice you. Ask questions!
Extra Costs You May Encounter in Arizona
Are there hidden fees that your advisor might not be telling you? Though big-wig financial companies in Arizona may charge service fees, they are still regulated by the Consumer Financial Regulation Arizona.
In fact, premium finance companies can only place an interest or charge no more than 3% per month for an initial investment amount below $1,000; and no more than 2% per month if it’s more than $1,000.
To avoid unexpected advisor fees, find a financial firm that will work with you in creating an investment plan that fits your budget.
Comprehensive financial plans, estate planning, and other services can incur additional costs. Always look at what you are paying for and whether or not you need it. Financial advisors handle sensitive information about a person’s financial status. They should act in your best interests to avoid potential conflicts of interest. That’s why there are fiduciary standards.
Robo-Advisor vs. Traditional Advisor
Figuring out how to invest your money is already confusing, and there’s one more wrinkle to consider. To help you in your investment journey, let’s compare the difference between a Robo-advisor from a traditional advisor.
Robo-Advisor
Not everyone has the leisure time to watch the stock market trend go up and down every day. But many people are interested and willing to invest even with the relatively small amount of money they have. This is how “Robo-advisors'' came about. They provide a low-cost, automated solution to investing.
The biggest benefit is that they charge lower fees than human advisors. If you're the DIY-kind of investor, the “leave it to the algorithms” approach is worth investigating - but we recommend proceeding with caution when using large sums.
Traditional Advisor
If you have a lot of assets at stake and you want to learn about current market trends in-depth, a personalized approach is probably your best option. To build a solid investment plan with your advisor, it’s ideal to meet them personally, discuss investment objectives, and tailor everything to your needs. Note that all these come for a price.
How to Ensure Fair Fees
After you choose a financial advisor, make sure they don't sneak in extra fees. In an article published by Forbes, "Investing costs have significantly dropped in past decades, but advisor fees have not."
So, how do you ensure you're charged fairly?
Ask about the advisor's fee structure. A trustworthy advisor should be upfront and honest about what they charge.
Transparency is key. Get an estimate of the total cost including all services and commissions they charge.
Have them explain how each item in your account statement is charged and computed.
At Asset Preservation, we want you to make an informed decision. That’s why we provide detailed explanations of where to invest your money and how much we charge.
How to Minimize Financial Advisor Fees
Finding the balance between saving money from service fees versus getting premium service can be challenging. Most of the time, you end up paying for more because you're not sure what you're looking for or what to avoid.
We've laid out some tips that you might want to explore to minimize financial advisor fees:
- Go for the win-win solution. Hire a fee-based advisor. You only pay for the service you agreed to buy. That means fewer surprises when asking, “how much does a fee-only financial advisor cost?”
- Negotiate fees. Be upfront if you think they're charging way too much or pushing for other services you don't like to avail.
- Be innovative. To keep costs low, make technology work for you, including your investments. You can use a Robo-advisor to get a feel for how investing works before making the larger jump to a financial advisor.
As you might expect, the highest-rated financial planners frequently charge higher fees. But keep in mind that it’s not that hard to find one that offers a unique blend of affordability and quality.
Tips for Finding a Financial Advisor
An expert in navigating the financial market and providing a range of investment choices could benefit you in the long run.
If you live in the Arizona area, working with a local financial advisor might even be better.
We've put together a few tips for finding a financial advisor near you:
- Referrals: ask your family and friends for who they know that has a proven track record.
- Don't search too far: Find a local financial advisor who could meet you at their local office or coffee shop to discuss your investment portfolio. It might even open local market investment opportunities.
- Look for flexibility: Work with an advisor who can customize your investments based on local market trends. No one knows your local economic conditions better than a financial planner in Arizona.
How Much Money Should I Have Before Getting a Financial Advisor?
If you are asking, “how much does a financial advisor cost?” then you are probably wondering how much money you should have before you seek a financial advisor. Financial advisors are not only for high-net-worth individuals and families. Anyone can benefit from a financial planner.
Some financial advisors will have a threshold for their clients. This means that they only accept clients who have assets valued at a certain level.
When seeking out a firm, look for this. Anyone can benefit from having a certified financial advisor to manage their financial affairs and create a solid financial plan. This is why we are a full-service firm. You don’t have to worry about diverting your attention between too many places to find the advice you need.
Is Having a Financial Advisor Worth It?
If you are a high-income earner, there are several reasons why you may be looking for a financial advisor. When asking, “how much does it cost to have a financial advisor?” you need to think about the services they provide and how they can help improve your financial future.
- You have a complex financial situation: Managing your finances can be complicated and overwhelming, especially if you have multiple income sources, investments, or significant assets. With our expertise in budgeting, asset management, taxes, retirement planning, and more, we can offer a comprehensive approach to managing your finances that allows you to make informed decisions about how best to use your money.
- You have very specific financial goals: Whether it's saving for a down payment on a home, funding your child's education, or growing your wealth through investments, working with a professional gives you the guidance and support necessary to achieve long-term success.
- You don’t have the financial expertise to tackle this on your own: A financial planner can provide valuable guidance and support for those who don't have the necessary skills or resources. Whether you're looking for help with budgeting, investing, taxes, or estate planning, a financial planner can make sure that your money is managed properly and that you get the most out of it.
You are going through a transition or significant life events: Are you getting married, planning for retirement, or going through a divorce? We can provide tailored advice to ensure you make the right decisions for your long-term goals and help you create a financial plan that works for your current situation.
Getting Started
The greatest benefit to an experienced advisor is how easy they make it for you to succeed. When asking, “how much does a financial advisor cost?” remember you are paying for expertise and experience. It doesn't have to be hard. Enjoy the process of working with a professional who makes you feel confident and excited about your financial journey.
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Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
