Investment Advisers (2024)

FAQs

Is 1% too high for a financial advisor? ›

Bottom Line. On average, financial advisors charge between 0.59% and 1.18% of assets under management for their asset management. At 1%, an advisor's fee is well within the industry average.

Most of my research has shown people saying about 1% is normal. Answer: From a regulatory perspective, it's usually prohibited to ever charge more than 2%, so it's common to see fees range from as low as 0.25% all the way up to 2%, says certified financial planner Taylor Jessee at Impact Financial.

Less than 10% of active large-cap fund managers have outperformed the S&P 500 over the last 15 years. The biggest drag on investment returns is unavoidable, but you can minimize it if you're smart. Here's what to look for when choosing a simple investment that can beat the Wall Street pros.

Very generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could also be higher, such as $500,000, $1 million or even more.

While 1.5% is on the higher end for financial advisor services, if that's what it takes to get the returns you want, then it's not overpaying, so to speak. Staying around 1% for your fee may be standard, but it certainly isn't the high end. You need to decide what you're willing to pay for what you're receiving.

Level 1 Financial Advisor – earns $100K-$300K

At the higher end, $300,000, puts the advisor in the top 10% of household income in the United States, which is not bad at all. Many of these advisors have earned professional designations that allow them to offer more services and expertise to their clients.

At Schwab, there's no cost to work with your Financial Consultant. ² There's no cost whether you're getting assistance in creating your personalized plan, or receiving tailored product recommendations and direct access to our specialists.

Gross advisory fee applicable to accounts managed through Fidelity^® Strategic Disciplines ranges from 0.20% to 0.49% and gross advisory fee applicable to accounts managed through Fidelity^® Wealth Services ranges from 0.50%–1.04%, in each case based on a minimum investment of $2 million.

Can I negotiate the percentage I pay my adviser? The short answer is yes. Ken Robinson, certified financial planner at Practical Financial Planning, says while a 1% fee may be common, advisers who charge based on AUM are increasingly scaling down from 1% at lower thresholds in the past.

Most advisors do not beat market averages. There are popular index funds that track indices, such as the S&P 500, and a little over 80% of the time advisors and even actual mutual fund managers do not beat these taking 15 years into consideration. A majority of financial advisors will not beat the S&P.

Who are the top 5 investment advisors in the US? ›

BlackRock, Vanguard, Fidelity, State Street Global Advisors, and J.P. Morgan Asset Management are the five largest financial advisory firms in the United States, ranked by assets under management (AUM). The size of these firms allows them to offer a multitude of services to their clients.

Seek professional advice

Of high-net-worth individuals, 69 percent work with a financial advisor. Compare that to just 33 percent in the general population.

Life events. Graduating college, getting married, expanding your family and starting a business are some major life events that might cause you to reevaluate your financial situation. A financial advisor can help you manage these life events while making sure you get or stay on track.

Hiring a single advisor to manage an extensive investment portfolio may be unwise and restrictive since it can include a large number of undertakings.

That said, a minimum of $2 million to $5 million in assets is the range where it makes sense to consider the services of a wealth management firm. Much below that and it might be hard to justify the expense of this type of service. Again, these minimum levels will vary by firm.

One common method is for advisors to charge a percentage of the assets they manage on your behalf. This rate often ranges from about 0.5% to 2% per year. For example, if an advisor manages $1,000,000 for you and charges a 1.2% fee, you would pay $12,000 annually for their services.

A good average number of clients per financial advisor to have is usually in the range of 50 to 150. But you may need fewer than that if you're primarily targeting high-net-worth individuals. Finding your ideal number of clients can depend largely on your goals as an advisor.

High Net Worth Advisor Basics

The financial services industry generally defines a high net worth individual as anyone with liquid assets of $1 million or more. Liquid assets typically include checking and savings accounts, securities such as stocks and bonds, and shares of mutual funds and exchange-traded funds.

Hiring a financial advisor isn't necessarily a need, but it could be a regret if you don't work with one. If you don't have the right experience and knowledge, then hiring a financial advisor can make a world of a difference in seeing the returns you're hoping for.