Average Cost of a Financial Advisor
A high-level overview of financial advisor fees and structure, including ours
Fee-Only Financial Advisor Fee Structure
Fee-only financial advisors typically use a fee structure in which as the assets under management increase, their fees decrease (or so they should).
It is possible, however, that as your assets grow, the financial advisor does not revisit the fee structure and adjusts as needed.
The associated fees with assets usually are not automatic. Meaning, that once you cross a threshold, the fee adjusts to reflect the new tier.
Instead, the assets need to be monitored and adjusted by the financial advisor and/or their team.
Average Financial Advisor Fees
In a survey of nearly 1,000 advisors by Bob Veres' Inside Information, the typical financial advisory fee up to $1 Million in assets under management is 1%.
It is important to note, that a substantial number of financial planners charged more than 1% for clients with less than $250,000. The median fee for $250,000 or less was ~1.25%.
As the assets under management increases to larger amounts, most advisors decrease their fees incrementally by 0.25% at a time (e.g., 1.25%, 1.00%, 0.75%, and 0.50%)
How Does the Amount of Assets Managed Impact Fees?
Veres' survey confirmed the median AUM fee does decline as the assets under management increase.
Our Financial Advisor Fees
Our investment fees have a range depending on the assets being managed. As the assets increase, our fees decrease.
This is because as the assets increase, the workload eventually reaches a status quo and no longer increases. As such, we try to keep our fees competitive.
Our Individual Investment Fees
Business Retirement Plan Fees
Our business retirement plan fees for companies range from as low as 0.14% up to 0.85%.
These are our fees to manage the retirement plans for an organization.
Difference Between Langan Financial Group's Fees and Other Advisors
The biggest difference we can see between our fees versus others is how the tiered structure is applied.
We set up our fees to be reduced as the assets grow. As it grows and hits certain benchmarks, our fees will decrease at a flat rate.
Meaning if we charge 75 bps (75% of 1%. So, it is 0.075% ) for the assets at X value, the whole plan will be charged 75 bps. Rather, some organizations may tier their pricing so it may look like this:
- 1.15 bps for the first $250,000
- 95 bps for the next $250,000
- 75 bps for the next $250,000
So while it may appear you are being charged at the 75 bps rate, when it is all weighed out, in actuality, you are being charged a much higher cost.
At 75 bps of $750,000, the annual FLAT fee would be $5,625. However, for the other structure, you could be paying $7,125. That is $1,500 more in fees!
Financial Advisor Fees
FINRA's Investor Education Foundation conducted a survey researching what investors on average are paying.
From the survey, came some surprising information regarding how much or little people believe they are paying for investment services.
According to a 2021 FINRA Investor Education Foundation Survey:
- 60% believe they do not pay fees for investment advice
- Only 56% of investors believe they pay fees or commissions for trades
FINRA Investor Survey Financial Advisor Fee Breakdown
The survey suggests that it is unclear to investors what types of fees they pay for their non-retirement accounts.
While more than half of mutual fund owners report paying mutual fund fees or expenses (57%), almost a third (32%) appear to be unaware that they are paying these fees, and 10% do not know.
Among those who frequently discuss investment options with a professional, the majority (60%) say they do not pay fees for investment advice.
Furthermore, 14% of all respondents do not think that they pay any fees, and 17% do not know how much they pay in fees.
A plurality of all respondents (43%) feel they pay less than 1% annually in fees for their non-retirement accounts.
Among respondents who provided an estimate of their annual fees (including those who said “no fees” but excluding those who answered “don’t know”), the majority (60%) are confident that their estimate is correct.
We promise you, you are paying some sort of fee. Our industry can be quite complicated and frustrating when it comes to not only understanding the fees but the lack of transparency about fees.
This survey is the perfect example, highlighting the lack of awareness and transparency in the financial industry.
This is why we focus on transparency. We openly discuss our financial advisor fees, services, and set expectations so that you are completely aware of everything.
In order for us to serve you, we want to be part of a team, and to do so relies on communication and trust.
Schedule a Review of Your Financial Advisor Fees
Langan Financial Group's financial planning team has over 100 years of experience providing financial services.
Give us a call at 717-288-1880 or visit our financial advisor contact page to see how we can help your retirement plan, today.
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Disclosure: Check the background of your financial professional on FINRA's BrokerCheck. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Cambridge and Langan Financial Group, LLC. are not affiliated. Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, to residents of: AL, AZ, CO, DE, FL, GA, IA, KY, MD, NJ, NM, NY, NC, OH, PA, TX, VA, WI Cambridge and Langan Financial Group does not offer legal advice. Estate planning services are in regards to your overall financial plan. Always be sure to speak to a legal professional in regards to specific legal matters. Fixed insurance services offered through Langan Financial Group.
Testimonial/Endorsement Disclosure: The testimonials may not be representative of the experience of other customers. The testimonials are no guarantee of future performance or success. All of the testimonials/endorsements are clients with the exception of Steven Martinez of York SPCA. There was no cash nor non-cash compensation for any of the testimonials provided.
© Langan Financial Group
Harrisburg, PA Office
Address: 1863 Center St, Camp Hill, Pa 17011
Phone: 717-288-1880
York, PA Office
Address: 3405 Board Rd, Suite 200, York, Pa 17406
Phone: 717-773-4085
