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Average Financial Advisor Fees

I’ve had a few people ask me about average fees. This is a result of my article a few weeks back about my new fee come 2023. I figured I would go ahead and share some quick breakdowns of averages in my world. At least averages when it comes to fees for your financial advisor and also for investment expenses. One last comment before we jump into it. These are median numbers.

 

Also, I am going to break this down in a bullet-point format. It seems like the cleanest way to quickly illustrate things. Finally, I am using my new fee of $12,000 which starts in 2023. Here we go!

 

$1 million client:

  • Average advisor charges 1% which equals $10,000.
  • Average advisor investment fee expenses are .65% which equals $6,500.
  • Total all-in cost for average advisor is $16,500.

 

  • Forward Thinking Wealth Management (FTWM) fee is $12,000
  • FTWM investment fee expenses are .40% which equals $4,000.
  • All-in total for my firm is $16,000.
  • $500 annual client savings.

 

$2 million client:

  • Average advisor charges .85% which equals $17,000.
  • Average advisor investment fee expenses are .65% which equals $13,000.
  • Total all-in cost for average advisor is $30,000.

 

  • Forward Thinking Wealth Management (FTWM) fee is $12,000
  • FTWM investment fee expenses are .40% which equals $8,000.
  • All-in total for my firm is $20,000.
  • $10,000 annual client savings.

 

$3 million client:

  • Average advisor charges .75% which equals 22,500.
  • Average advisor investment fee expenses are .65% which equals $19,500.
  • Total all-in cost for average advisor is $42,000.

 

  • Forward Thinking Wealth Management (FTWM) fee is $12,000
  • FTWM investment fee expenses are .40% which equals $12,000.
  • All-in total for my firm is $24,000.
  • $18,000 annual client savings.

$5 million client:

  • Average advisor charges .65% which equals $32,500.
  • Average advisor investment fee expenses are .65% which equals $32,500.
  • Total all-in cost for average advisor is $65,000.

 

  • Forward Thinking Wealth Management (FTWM) fee is $12,000
  • FTWM investment fee expenses are .40% which equals $20,000.
  • All-in total for my firm is $32,000.
  • $33,000 annual client savings.

 

 

A quick note. There are constant reports on what the average fees are in my world. The source I referenced is from Michael Kitces, who is one of the biggest researchers in my profession of financial advising. I am sure there are some reports that list average fees as being lower, however I went with the Kitces information for two reasons. First, he is the leader of all research in personal financial planning. Next, the fees he references are actually lower than other fee analysis reports I have seen. So, even though they may seem high, they are lower than other studies.

 

Now, I am breaking this out because a few people wanted more information. I don’t think you should be picking your advisor simply based on the lowest fees. I can tell you my toughest clients are the ones who came to me doing some discount shopping. Instead, you should be looking for an advisor based on what I use to set my fee – my service level, knowledge and experience. And if that brings you to paying the average advisor fee that is fine.

 

My point with all of this is to just verify with your advisor how much you are paying. Not only to the advisor but also for the investments themselves. And be sure it is the total amount, not just what they net. That is another dirty trick I saw advisors do in the wirehouse world all those years ago, but I will stay out of that rabbit hole for now.

 

One final thought. Even I was surprised with this breakdown. I honestly have never done it before. Even with my fee increase next year clients will still save money by working with me if they “only” have $1 million. That was an eye-opener for me.



I’m Dan Johnson, CFP®, founder of Forward Thinking Wealth Management. I run a flat-fee financial planning and investment management firm located in beautiful Akron, OH. Although I am in Akron, OH, I work with clients regardless of location. I cater to owners of equity compensation positions who are looking to organize their financial lives, keep more of what they make, and do the things they want in retirement and even now. 

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