What Is the Average Cost of Using a Financial Advisor?

The average cost of using a financial advisor typically ranges from 0.50% to 1.5% of assets under management (AUM) per year — with 1% being the most commonly cited benchmark. But that single number doesn’t tell the whole story. Depending on the fee structure, the services included, and the firm you work with, what you pay can look very different. Understanding advisor costs is one of the most important steps in building a financial planning relationship that actually works for you.

Executive Summary

Financial advisors charge fees in several ways: commissions, AUM-based fees, hourly rates, and flat fees. The most common structure is 1% of AUM annually. Whether that’s a fair price depends heavily on what’s included. Investment management alone at 1% sits above the industry average; add comprehensive financial planning and the value proposition improves significantly. No fee model is perfect — each comes with trade-offs. At Oak Road Wealth Management in Lee’s Summit, Missouri, we charge 1% of AUM for the first million, with fees declining beyond that threshold. Our goal is simple: we do better when you do better.

What Does a Financial Advisor Actually Charge?

There is no single universal price for financial advice. Advisors use several distinct fee structures, and knowing the difference protects you from surprises.

Commission-Based Fees

Some advisors earn money by receiving a commission when they sell you a financial product — an insurance policy, a mutual fund, or an annuity. The advice may appear “free,” but the compensation is embedded in the product itself. This creates a potential conflict of interest: the advisor’s recommendation may be influenced by what pays them the highest commission rather than what serves you best.

AUM (Assets Under Management) Fees

This is the most widely used model in the fee-based advisory world. The advisor charges a percentage of the total investment portfolio they manage on your behalf — typically somewhere between 0.50% and 1.5% annually. On a $500,000 portfolio at 1%, that equals $5,000 per year. Fees are usually deducted directly from the account quarterly, making them easy to overlook but important to understand.

Hourly Fees

Some advisors charge by the hour, much like an attorney or accountant. Rates typically range from $150 to $400 per hour depending on the advisor’s credentials and market. This structure works well for people who need occasional guidance on a specific question — Social Security timing, estate planning, or a one-time investment review — but it can become expensive for ongoing, comprehensive planning.

Flat-Fee (Retainer) Financial Planning

Other advisors charge a fixed annual or monthly retainer for financial planning services, separate from any investment management. These fees typically range from $2,000 to $10,000 or more per year depending on complexity.

Is 1% of AUM a Fair Fee for a Financial Advisor?

1% of AUM is the industry’s most recognized benchmark — but context matters enormously.

If an advisor charges 1% solely to manage your investment portfolio — rebalancing, selecting funds, executing trades — that fee is above average. Robo-advisors and index-fund platforms offer basic investment management for 0.05% to 0.35%. Paying 1% purely for portfolio management is difficult to justify.

However, if that 1% also covers comprehensive financial planning — retirement projections, tax planning strategy, Social Security optimization, insurance analysis, estate planning coordination, and ongoing goal-based guidance — the value equation shifts considerably. You are no longer paying for a service a computer can replicate. You are paying for a relationship with a professional who understands your full financial picture and helps you make better decisions over time.

The right question isn’t “Is 1% too much?” It’s “What am I getting for that 1%?” Our belief is that creating confidence and clarity in a retirement plan is one of the most valuable services we can provide.

Are There Drawbacks to Any Fee Structure?

No fee model is perfect. Every structure comes with trade-offs, and a trustworthy advisor will be upfront about them.

Commission-based: Potential conflicts of interest. The advisor may recommend products that benefit them, not you.

AUM-based: The fee grows as your portfolio grows. That may feel disproportionate even if the workload hasn’t changed. Conversely, advisors may be hesitant to recommend strategies that reduce the assets they manage.

Hourly: Unpredictable costs. Clients sometimes avoid calling their advisor because they’re worried about the meter running, which can lead to worse decisions.

Flat-fee: The assets you have may still influence what the flat-fee will be. The fee may feel subjective.

Understanding these trade-offs is not a reason to avoid working with an advisor. It’s a reason to ask good questions before you start.

How Does Oak Road Wealth Management Charge for Its Services?

At Oak Road Wealth Management in Lee’s Summit, Missouri, we use an AUM-based fee structure:

• 1% of AUM for the first $1,000,000
• 0.5% on second $1,000,000
• 0.25% on third $1,000,000 and beyond

This approach means that as your wealth grows, you pay a smaller percentage on the assets above that threshold. We include comprehensive financial planning alongside investment management — retirement planning, tax strategy, cash flow analysis, and more.

What Are the Pros of This Structure?

We succeed when you succeed. Because our fee is tied to your portfolio’s value, we are genuinely aligned with growing and protecting your wealth. When markets are volatile and we act in your best interest, that directly reflects in our own compensation.

All-in value. You are not paying a separate retainer for financial planning on top of an investment management fee. Both are included at 1%.

Declining rate at scale. As your portfolio grows beyond $1 million, you benefit from a lower marginal fee. This rewards long-term clients who continue to build wealth with us.

What Are the Cons of This Structure?

The AUM incentive. Like all AUM-based advisors, we have a natural incentive to manage as much of your money as possible. If you’re considering using a cash windfall to pay off your mortgage rather than invest it, that’s a real conversation we need to have honestly — even though recommending payoff reduces our fee base. We are committed to having that conversation transparently.

Fee grows with success. In a strong market year, our fee increases even if our workload stays the same. We think the alignment benefit outweighs this, but it’s worth acknowledging. This is also the reason for our tiered fee schedule.

We believe that transparency about how we earn our income is foundational to a strong client relationship. If you ever want to talk through our fee structure in detail, that conversation is always welcome.

Why Trust Matters More Than the Fee Structure

You can find a low-cost advisor who costs you more in missed opportunities and poor guidance. You can find a higher-cost advisor who transforms your financial life. Cost is one data point — trust is the deciding factor.

When evaluating any financial advisor, ask these questions:

• Are they a fiduciary? (Legally required to act in your best interest at all times)
• Are they fee-transparent? Do they clearly explain how and what they earn?
• Do they listen to your goals, or do they lead with products?
• Do they have a clear, consistent investment and planning philosophy?
• Do they instill clarity and confidence?

At Oak Road Wealth Management, we are a fiduciary firm. That means we are legally and ethically obligated to put your interests first — always. We believe financial planning is a relationship built on trust, not just a transaction. The right advisor should feel less like a salesperson and more like a trusted partner who happens to know a lot about money.

If you’re in the Lee’s Summit, greater Kansas City area, or beyond and want to understand what working with a fee-only financial planning firm looks like, we’d love to start that conversation.

Frequently Asked Questions

What is the average financial advisor fee?

The average financial advisor fee is approximately 1% of AUM per year for ongoing investment management and financial planning. Fees range from 0.50% to 1.5% depending on the firm, the services provided, and the size of the portfolio.

Is paying 1% to a financial advisor worth it?

It depends on what’s included. If 1% covers only investment management, it is likely above average value — especially compared to low-cost index funds or robo-advisors. If 1% includes comprehensive financial planning, retirement strategy, tax planning, and ongoing guidance, many clients find it well worth the cost.

What is an AUM fee and how does it work?

AUM stands for Assets Under Management. An AUM fee is a percentage of your total investable portfolio charged annually by your financial advisor. On a $600,000 portfolio at 1%, you would pay $6,000 per year, typically billed quarterly directly from your account.

What is the difference between a commission-based and a fee-based financial advisor?

A commission-based advisor earns money by selling financial products and receives payment from the product provider. A fee-only advisor charges you directly — through AUM fees, hourly rates, or flat fees — and does not earn commissions on product sales. Fee-only advisors who are fiduciaries are generally considered to have fewer conflicts of interest.

How much does a financial advisor cost for retirement planning specifically?

Retirement planning costs vary by advisor and scope. Under an AUM model, retirement planning is often bundled into the overall fee. Under an hourly or flat-fee model, a comprehensive retirement plan might cost $2,000 to $5,000 or more as a standalone engagement.

Does Oak Road Wealth Management charge separately for financial planning?

No. Oak Road Wealth Management includes comprehensive financial planning as part of our AUM fee. We charge 1% of AUM for the first million dollars in assets we manage, with a declining rate on assets above that threshold.

How do I know if a financial advisor is a fiduciary?

Ask them directly: “Are you a fiduciary at all times?” A true fiduciary will confirm this in writing. You can also verify an advisor’s registration and any disciplinary history through FINRA BrokerCheck or the SEC’s Investment Adviser Public Disclosure database.

Where is Oak Road Wealth Management located?

Oak Road Wealth Management is a financial planning firm based in Lee’s Summit, Missouri, serving clients throughout the Kansas City metro area and beyond.

Oak Road Wealth Management is a financial planning firm in Lee’s Summit, Missouri. This article is intended for educational purposes and does not constitute personalized financial advice. Please consult with a qualified financial advisor before making any financial decisions.

Written by Andrew Matz, Financial Planner at Oak Road Wealth Management.