Originally posted on https://soleraam.com/2019/06/tips-to-reduce-the-cost-of-financial-advisor-fees/
While ultimately your financial advisor can save you a lot of money, their services aren’t inexpensive. Here are some tips to lessen financial advisor fees.
Did you know only 17 percent of Americans admit to working with a financial advisor to manage their money?
One of the main reasons why regular people refuse to accept help with financial management is because they don’t think they can afford the steep financial fees.
While it’s true that some financial advisor fees are a bit high, it’s also possible to cut back on them if you don’t have millions to spend.
Financial Advisor Fee Breakdown
Before you learn how to cut down on financial advisor fees, it’s important you learn how the breakdown works. Financial advisors charge their clients in one of the following ways:
Fixed Fees: Some financial advisors charge a fixed amount if they perform a specific service. For example, you might only pay a fixed fee if all you need is a financial plan.
Commissions: When a transaction such as a trade or purchase concludes, advisors might collect a commission.
Hourly Charges: It’s custom for financial advisors to charge an hourly rate if they take on a special project or are only consulting.
Performance-based Fees: Advisors might collect a fee on top of what they agreed on with their clients when they excel and outperform.
Percentage of Assets: If the number of assets the advisor manages is quite large, they might take a percentage based on the amount they manage. For example, the typical rates range between 1% – 2% a year.
How to Reduce the Fees
If you want to reduce the cost of financial advisor fees, the first thing you need to do is look for someone who is fee-based and not commission-based. Fee-based advisors usually work hard to grow their clients’ portfolios, and clients know exactly what they’re paying for.
High-quality financial advisors often offer extra services for their clients, which is why their fees are a bit higher. If you want to cut back on fees, you should start by negotiating with the advisor.
Explain to them why you consider the fee is too high for you to pay. It might also be possible to ask the advisor for only basic services in order to pay less on fees.
If you don’t have many assets, another way to cut down on fees is to try a robo-advisor. These robo-advisors are algorithm-driven financial services that have very little human supervision.
They work by collecting your basic financial information, establish your future goals, and offer a detailed plan of action.
How to Find an Advisor
Before you settle for an advisor, you need to do your research to find the advisor that best fits your financial needs. There are a few online tools that can help you pick an advisor based on the information you enter.
Make sure you meet with several advisors before you settle on one.
How to Reduce Financial Advisor Fees: The Bottom line
Now that you know a few ways to cut back on financial advisor fees, it’s time you take control of your finances.
Need a little help with your finances? Contact us today to schedule a meeting.