Although the cost of financial advice has come done somewhat from past years, investment management and financial planning are still ludicrously expensive. For many people, the high cost of financial advice makes it non-accessible. Tides are changing! I’m pleased to present you with a list of low cost financial advisors!
Can I get a whoo hoo on that?
For those of you new to my blog, my name is Sara G. I’m a CFA® charterholder and financial advisor marketing consultant.
I periodically blog about financial products and services so that consumers can avoid being taken advantage of by the financial services industry. There are alot of schmucks out there hawking crap products disguised as financial advice. Don’t be fooled! Please subscribe to my newsletter to receive updates that raise awareness of consumer financial issues, so you can avoid being taken advantage of by the financial services industry.
Before we get started, please understand that this is not an endorsement of any particular company. Please conduct your own due diligence and come to your own decision. Also, I am under no obligation to update this list and the conditions of service offered by these firms may change over time without being reflected here. I have no formalized business relationship with any of the firms listed on this low fee financial advisor list.
List of low cost financial advisors
In no particular order…
Abundo provides flat fee financial planning. From the company’s website, as of May 16th, 2022:
$375 start up
$89 per month
$450 start up
$139 per month
This includes unlimited financial guidance for all of life’s adventures including all meetings, texts, e-mails, and calls.
From the company’s ADV Part 2 brochure, as of May 16th, 2022:
Fees are set as a fixed annual fee, paid quarterly, and based approximately on the total time required to
service an account yearly. These typically run between $625 per quarter, or $2,500 per year, to $2,000 per quarter, or $8,000 per year, but may be more if complex multiple or very large accounts are involved.
From the company’s website, “Overall, our average annual client fee is 0.08%, below one-tenth of one percent annually.” They base their fee on the estimated amount of time they’ll need to service your account. Services provided include investment management and financial planning. They recommend a $500,000 account minimum.
Skip Fleming of Lodestar Financial Planning is an advice-only financial planner. This means that Skip does not provide investment management services; he only delivers financial planning.
Advice-only financial planners are a great option for someone who doesn’t want to pay for investment management because they can do it themselves, or has little in assets to manage in the first place.
Skip is an hourly planner, meaning that you only pay for the advice you need when you need it. He charges an hourly rate of $360/hour or a flat fee of $250 to $500 per month depending on complexity.
The data below is from the company’s ADV Part 2 brochure, as of May 16th, 2022. Asset tiers include all accounts in a household combined and the minimum yearly fee is $550 per household.
|Assets Under Management in|
Custodian-Linked Accounts other
than 529 Accounts Annual Advisory
|$0.00 – $2,100,000||0.75% for assets in this level|
|$2,100,001 – $20,000,000||0.375% for assets in this level|
|$20,000,001 – $100,000,000||0.188% for assets in this level|
|$100,000,001 and above||0.094% for assets in this level|
The client pays an AUM fee in accordance with this schedule, from the company’s ADV as of June 2022:
|Total AUM||Annual Fee|
|0 to $2,000,000||0.5%|
|$2,000,001 to $10,000,000||0.25%|
|$10,000,001 and up||0.125%|
This is a flat fee advisor. They charge $5,100 annually, or $425 per month.
It is important to note that this would only be a low cost option for larger portfolios. When a client has $1,000,000 in assets to manage, a fee of $5,100 annually would be 0.51% of their assets. This is lower than the industry norm.
But, let’s say you had a much smaller portfolio. If you had, for example, $500,000, this $5,100 flat fee would be an annualized rate of 1.02% of your total assets. Retirement Portfolio Partners gives clients with smaller portfolios the option to pay 1% of their portfolio value, and usually by “smaller portfolio” they mean $500,000 or less. The 1% figure is around what the industry standard fee is, so for a smaller portfolio, this would not be classified as low cost financial advice.
Much like Firstmetric (mentioned above) this would be a good, low cost financial advisor for someone with about $1MM or more of assets, but for a smaller portfolio it is not such a bargain. That is why this firm is included on the low cost financial advisor list.
Financial plans are $1,000 for initial plan and negotiated fee for subsequent updates.
Investment management fees, as per the company’s ADV as of May 17th, 2022, are as follows:
|Assets Under Management||Annual Fee (%)|
|Less than $299,999.99||0.43%|
|$300,000 to $999,999.99||0.35%|
|$1,000,000.00 to $1,999,999.99||0.30%|
|$2,000,000 and above||$6,000.00 fixed annual fee|
Charges a yearly fee of $500 plus 0.25% of the assets for portfolio management, consulting, and financial planning services.
Why I put together this list of low cost financial advisors
I compiled this list of low cost financial advisors because I want to be an advocate for the consumer.
Simply put, paying low financial advisor fees allows you to keep more of your hard-earned money! The impact of fees charged over time can be pretty significant.
Alot of financial advisors are grossly overcharging clients and not doing much more than parking their money in a few ETFs and doing an annual performance review. If that is the case, it’s probably not worth paying 1% of your wealth. So it’s not as much about the fee being charged as what you are getting for it.
When I put this low fee financial advisor list together, I reviewed the company’s website and Form ADV Part 2. There is nothing to say this was a complete review; it was a very cursory analysis. Please conduct your own research if you are searching for a financial advisor.
What fee should you pay for financial advice?
A low fee.
By that I mean, 0.50% of your wealth annually, or less. So if you have $1,000,000, no more than about $5,000.
Although in certain cases, a higher fee may be warranted. Do you get what you pay for?
You really have to look hard and ask the right questions – the hard questions.
Some financial advisors are charging a very high fee (1% or more) and providing great service. However, you have to really be sure that it’s worth it. If you have complex needs (not that they convince you of this, which they will try to do, but that really do command a great deal of their time and attention).
You may have complex needs in the case that you:
- Have a special needs child, for example, who requires your financial advisor to spend countless hours working with your estate attorney. Or if you have complicated estate issues for other reasons…
- If you are selling a business.
- If you have a large concentrated position that it takes a ton of time to unwind in a tax-aware manner
- If you have are an executive with stock options that come with complicated terms, etc.
- If you just plain old demand alot of time from your advisor because you demand alot of time
Here’s where consumers get a bit fleeced by financial advisors.
Often there is a lack of transparency about what they are really doing behind the scenes. Are you just taking their word for it? Do you understand completely what they are doing in all aspects? It’s important, because without demanding complete and total clarity about what the advisor is doing for you, it’s easy to be misled into thinking that they’re doing alot more than what they really are.
And they’ll often lead you to believe you have complicated needs, when in fact you don’t. Get an honest opinion and if you have doubts, keep asking other advisors.
Simplicity and transparency are important – demand it now!
If you don’t understand how you are being charged, demand this information and ask questions until you get it completely. Consumers have a right to total transparency – and anyone who holds it back from you is NOT worth your business!!!!
Demand clarity and transparency!
If you don’t understand each and every aspect of how the financial advisor is servicing your account, demand this information and ask questions until you get it completely.
You have a right to do this! It’s your money. If they get annoyed at your questions – get another advisor (maybe even one from my list of low fee financial advisors above!)
And by the way, did you notice how everyone on this list states their fees on their website clearly? It serves as an illustration of what fee transparency is: clearly presented, accessible, easy to understand. Advisors who don’t take the time to present their fees this way aren’t transparent!
AUM fees can be kinda tricky
Wall Street came up with the convention of the AUM fee – charging you a fee based on the amount of assets they manage for you. Usually financial advisors charge around 1%.
See, here’s the thing about that.
It seems so small. 1% of my assets, you say, that doesn’t sound like alot! However when you compute the hard dollar fee, it sounds like much more.
Wall Street is very good at taking advantage of people who either aren’t good at math or don’t like doing it, which is why the AUM model has persisted over time. There’s nothing wrong with charging AUM fees, but in my view, it’s not the most straightforward pricing method.
Here are some alternatives.
Flat fee financial advisors
Flat fee advisors charge one hard dollar fee that is clearly stated. That’s not to say that their fees can’t be empirically higher than what you would pay an AUM advisor. A high flat fee, as a percentage of assets, may exceed the 1% of AUM fee that is the industry norm. It varies case by case as to whether or not a flat fee advisors is actually a low fee advisor. However flat fee advisors are presenting their fees in an inherently more transparent way because they are presenting an actual dollar amount.
Hourly financial planners
Hourly advisors provide financial advice for a set hourly rate. Many hourly financial planners provide services to do-it-yourself clients who require a few hours of analytical guidance and recommendations that they implement on their own.
What kind of fee should my financial advisor charge?
There’s no way to say what kind of fee a financial advisor should charge you – AUM, flat, or hourly – because it depends on your specific situation.
However, whatever fee they charge, there should be total transparency, and the fee should be as low as possible.
Now, there’s nothing to say that someone who charges a flat or hourly fee will be doing you right. The value must be there. But flat and hourly fee advisors do tend to be more transparent empirically. There may be other fees that come along with the package – fees for the underlying investments, custodial fees, transaction costs, and all sorts of other miscellaneous expenses.
Pay attention, get it in writing, and do the math for yourself. Don’t rely on their calculations – always do your own.
Concluding thoughts on my list of low cost financial advisors
If you know anyone else to be added to this list of low cost financial advisors, please contact me.
Or if you have any questions as you search for a financial advisors, send me a note as well. I am sick of consumers getting a raw deal and would be happy to hear your questions.
And like I said – you have to do your own research. This is not an endorsement of anyone mentioned here, and situations could change and not be reflected here. Also, there is selection bias inherent in this list. I did not interview all the hundreds of thousands of advisors out there, I conducted research using Google and posted on social media. So this is limited to those accessible to me. Again, conduct your own research; this list is intended to be a starting point but by no means is it exhaustive or conclusive.
I periodically blog about financial products and services so that consumers can avoid being taken advantage of by the financial services industry.
Please subscribe to my newsletter (free newsletter) to receive updates that raise awareness of consumer financial issues, so you can avoid being taken advantage of by shenanigans.
See you in the next blog!