So How Much Do You (Advisors) Charge? It’s a very reasonable question but not always an easily understood response. In a previous blog, I stressed the importance of not being afraid to ask your advisor HOW he is compensated.
So once the HOW is determined what does it all mean? How do you define reasonable compensation? HOW MUCH should you be willing to pay for advice?
As you might expect, advisors utilize a variety of methods and fee arrangements when delivering planning and investment services. To help provide a basis or starting point I’ve provided a set of tables outlining the range of advisor hourly fees. Hopefully the study provides a better understanding of HOW MUCH you could expect to pay.
Source: ©2012, FPA Research Center, Financial Planning Association. Data Gathered in October 2011.
It’s important to note – lower fees do not always ensure a high-quality, positive engagement. Most professionals charging higher planning fees can justify it because of their planner expertise or firm resources that provide a significant value-add for clients.
So ask yourself...
Can you easily articulate the value you get from your new or existing advisory relationship? If not, I recommend reviewing your prospective or current relationship to determine exactly what services you can expect out of your financial engagement. If you have doubts or are unsatisfied, do not hesitate to gather second opinions. You may uncover additional opportunities, or better yet, validate a perfect fit. Motivational speaker Jim Rohn, who led a true rags to riches life, once said:
You don't get paid for the hour. You get paid for the value you bring to the hour.
It’s a good motto for financial professionals and something to think about for anyone wondering what financial advice is really worth.