How much does Hiring a Financial Advisor Cost?
Managing your finances can be tough. Taxes alone can be such a headache. This is why the financial advisor cost is considered an investment.
Losing your hard-earned money is no joke, so protect it and keep it growing.
Paying for Financial Advice
Some folks complain about financial advisor cost because they get surprised when billed. This is why before hiring one, you must know how much they charge before anything else.
The payment or fees are usually in this order:
- First meeting is free and is where you tell the adviser what you need help with and in turn the adviser tells you how she or he can help you.
- Have the adviser tell you how much the advice cost exactly in order to for you to decide to continue or not. It would be better for the cost to be stated in dollars instead of a percentage of the amount you will be advised to invest.
- A statement of advice (SOA) will be drafted containing the strategies and financial products that the adviser will recommend, if you choose to continue with them. The SOA is paid for, either upfront or deducted from your investment balance.
- The cost of advice depends on how comprehensive it needs to be. A simple advice will cost anywhere from $200 to $700. A comprehensive advice can cost anywhere from $2000 to $4000.
- Should the SOA contain advice about insurance, the adviser will be paid by the insurance company, instead of the client, in the form of a commission.
- Know that even if you decide not to proceed with the recommendation in the SOA, you will still pay for it.
- Next is the fee for implementing financial advice.
- This fee is basically for administrative work. You can always negotiate the cost with your adviser.
- Payment can be made upfront or by deduction from your investment balance.
- Make cheques for investment products payable to the provider and not to your adviser.
- In case your engagement with the planner is on-going, the fee will be on-going as well. It is important to know what you are paying for.
- On-going payments may be for scheduled reviews, reports on your investment portfolio, newsletters, seminar invitations and more.
- If you don’t need one or two of the services in your on-going setup, you can inform your adviser and be billed less.
- Complain to proper authorities if your adviser charges you for services you don’t receive. Ask for a refund and compensation for this error.
Financial Advisor Cost versus Benefit
After an annual on-going setup or a year after implementing the adviser’s recommendations, find out if the cost is outweighed by the benefits you received.
If you have then you can continue with the service for another year or more. If not, ask your financial adviser why.
Every investment product you buy has a corresponding fee you have to pay for as well. If the cost of the product plus the fee are added up, does it still seem like an appealing investment? Have your adviser explain the products you bought and whetherhe or she will receive commissions from it.
If the commission is from your investment, you can change products to one that does not pay commission or have the commission rebated to you.Remember that every fee they charge is a deduction to your investment balance.
Sample Financial Advisor Cost
- Review of investments – $1000
- Investment platform access – $1500
- Investment manager fees – $1500
- Policy protectionyou can request for – $1000
Best advice is to ask where each payment goes. Who is receiving or charging each fee.
You financial adviser should explain the fees in order for you to understand what you are paying for. How much and how often you have to pay are questions you should never be afraid to ask.
Otherwise, your financial advisor cost might not get you anywhere.
