Financial Advisor Fees

A financial advisor can offer significant value to high-net-worth and ultra-high-net-worth individuals by helping manage the complex aspects of their financial lives. From investment strategy to estate and tax planning, these services come at a cost, and financial advisor fees can vary based on how those services are structured. Understanding these fee models is essential to making an informed decision that aligns with your financial goals.

A financial advisor is a professional who offers strategic advice to help protect and grow your wealth. Their role goes far beyond managing investment portfolios. A well-rounded financial advisor also supports high-net-worth individuals in areas such as tax planning, retirement strategy, risk management, insurance, estate and legacy planning, business succession, and philanthropy.

For those with substantial assets, understanding how to choose the right advisor is critical. This article explores how financial advisor fees work, the difference between fee-only and commission-based models, and what to consider when selecting a financial advisor for ultra-high-net-worth needs.

Financial Advisor Fees vs. Investment Fees

When a financial advisor recommends a product or investment, they typically charge an advisory fee. In addition to this, the client may incur other costs such as broker fees, trading fees, and expense ratios—collectively known as investment fees. These investment-related fees play a significant role in determining the overall performance of your portfolio.

Non-Human Advice

Thanks to technological advancements, many firms now offer algorithm-based solutions known as robo-advisors. These automated platforms create investment portfolios based on your risk tolerance, goals, and background. Most major investment firms include robo-advisors in their services, accessible directly from their websites. Robo-advisors generally charge lower fees than traditional or hybrid advisors, though they still base their fees on the value of your investment account. All fees are outlined in your investment agreement.

Billing and Taxes

Always review your billing statements to confirm that advisory and investment fees are accurately applied. It’s also important to note that advisory fees are currently not tax-deductible under federal law (at least until 2025), with few exceptions.

Transparency

Because fees directly affect your investment returns, transparency is essential. When evaluating a financial advisor, ensure you clearly understand their fee structure, how fees are calculated, and any additional investment-related costs. Ask whether the advisor receives any other forms of compensation beyond the stated advisory fees.

How to Find a Financial Advisor for Ultra-High-Net-Worth Individuals

If you’re an ultra-high-net-worth individual considering working with a financial advisor, you’re likely wondering how to choose the right one. The process takes time and careful evaluation, but it doesn’t need to be overwhelming.

A good place to begin your search is online. Use a reliable search engine to find financial advisors in your area who have experience serving ultra-high-net-worth individuals. As you review your options, pay close attention to how each advisor structures their fees—something we’ll explore further in later sections.

Generally, individuals with $1 million to $30 million in liquid assets are considered high-net-worth. Those with over $30 million fall into the ultra-high-net-worth category. (Liquid assets refer to funds that are readily accessible, not tied up in properties like your primary residence.)

The financial decisions and planning needs for high- and ultra-high-net-worth individuals differ significantly from those with smaller portfolios. That’s why it’s essential to work with an advisor who understands the complexities of managing large-scale wealth.

You can also ask for referrals from trusted family members, friends, or business associates who may already be working with experienced financial advisors. These conversations often provide candid feedback and can give you insight into how much others are paying in advisory fees—helping you make a more informed decision.

How to Evaluate Financial Advisor Fees

The larger your portfolio, the higher the stakes, meaning that even small decisions can have a significant financial impact. A seemingly minor oversight could translate into hundreds of thousands, or even millions, in gains or losses over time. That’s why it’s essential to evaluate financial advisor fees carefully and understand their long-term effect on your portfolio.

For example, consider a portfolio with $10 million in liquid assets. If that money is invested in actively managed funds with an average expense ratio of 2%, you’d be paying $200,000 annually in investment fees alone. However, if an advisor recommends reallocating those funds into low-cost passive index funds with a 0.1% expense ratio, while still meeting your financial objectives, you could potentially reduce your costs to $10,000 annually, resulting in substantial savings.

Another consideration is tax efficiency. An advisor who frequently trades to try to outperform the market may expose you to short-term capital gains taxes rather than more favorable long-term rates. Even a 5% difference in taxation can significantly affect your net returns, especially at higher income levels.

Now, consider the typical advisory fee of around 1% of assets under management. For a $10 million portfolio, this would equate to $100,000 per year. When evaluating whether this fee is justified, think about the total value of services provided—not just investment advice, but also planning in areas like tax strategy, retirement, estate planning, and more.

Understanding how fees are structured—and how they align with the overall value delivered—can help ensure your long-term goals remain on track while avoiding unnecessary costs.

When Does the Cost of a Financial Planner Not Make Sense

For those with relatively modest investment capital—say, around $100,000—it may be more practical to manage your finances independently. Low-cost index funds, basic savings strategies, and publicly available financial resources can often provide sufficient support without the need for ongoing professional advisory fees.

Paying thousands in advisor fees may not be cost-effective at this level, as the expense could outweigh the potential benefits or investment returns. That’s one reason many private wealth management firms set minimum portfolio thresholds for new clients. These minimums reflect the level of complexity and scale at which professional advisory services can offer meaningful value relative to their cost.

Similarly, if you’re early in your career or recently graduated, your financial planning needs may still be fairly straightforward. You might be focused on building savings, managing student loans, or budgeting—important goals, but ones that typically don’t require the in-depth, customized planning that high-net-worth individuals may need.

While it’s never too early to begin building healthy financial habits, more advanced planning services may become relevant later as your financial life grows in complexity.

Combination of Financial Advisor Fees and Commissions

1. Fee-Only

A fee-only financial advisor charges directly for their services, without receiving commissions from third parties. In most cases, this structure involves a flat percentage of the total assets under management (AUM), though it may also take the form of fixed fees, milestone-based payments, or hourly billing depending on the scope of work.

For example, an advisor may charge 1% annually on a $5 million portfolio, while additional services like tax planning or estate planning may incur separate fees. Hourly models bill based on time spent, and milestone models involve a fixed cost for a specific project, payable upon completion.

This structure minimizes potential conflicts of interest, as recommendations are not tied to third-party incentives. Fee-only advisors typically align more closely with fiduciary standards, placing clients’ interests first.

2. Fee-Based

A fee-based advisor charges a combination of direct fees and commissions. The fee portion may be similar to the fee-only model, but the advisor may also receive compensation from product providers, such as mutual funds, insurance firms, or annuity companies, for recommending certain financial products.

For instance, if an advisor suggests purchasing a mutual fund or insurance product, they may earn a commission from the provider in addition to any fees charged to the client.

It’s essential to ask how your advisor is compensated, as commission-based incentives may influence recommendations. Understanding the differences between these models can help you choose a financial advisor structure that aligns with your goals and preferences.

Want to avoid potential conflicts of interest? Learn more about how to [Get Matched with a Financial Advisor] who fits your financial situation.

Do Financial Advisor Fees Play a Role in the Demand for Such Services?

A significant portion of Americans do not work with a financial advisor. Common reasons include the abundance of free information online, high levels of personal debt, and the perception that financial advisors are only for individuals with substantial wealth.

There is some truth to the idea that advisory services are most useful at higher levels of wealth. As assets grow, so do the complexities surrounding them—estate planning, taxation, managing multiple properties, retirement planning, and wealth transfer strategies all become more relevant. For high-net-worth and ultra-high-net-worth individuals, these decisions often require more advanced planning and professional insight.

That said, many individuals—regardless of wealth—face financial uncertainty. Even those with significant assets can experience loss during market downturns or face challenges due to insufficient planning. Sound financial advice can help mitigate risk and preserve long-term financial stability.

Working with a fee-only financial advisor or wealth manager can provide clarity, structure, and planning across a range of financial needs, especially for those with portfolios of $500,000 or more. Understanding how fee structures work—and what services are included—can help you make informed decisions about whether and when to engage a professional.

If you’re ready to take the next step in managing your wealth, start by exploring options that fit your needs: