The True Cost of a Financial Advisor, Revealed

Image by Amy Hirschi on Unsplash

In a society where people turn to social media for help deciding between paint colors, it’s unthinkable that so many of us continue to entrust our financial futures to ourselves.

As research consistently reveals, working with a financial advisor nets investors an average of 1.5% to 4% in additional annual returns. Planning for retirement without the benefit of a financial advisor’s keen insights has grown more and more irrational.

Consider this example: A recent Vanguard study found that, on average, a $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.

So, why do some Americans continue to walk the financial road alone?

For some, the excuse is the false assumption that they can’t afford it. In actuality, the fees financial advisors charge are often less than most people think, and the insights they add often surpass an advisor's cost.

The truth is, financial advisors often charge a percentage fee for Assets Under Management (AUM) of between 1 - 2%. A 2017 AdvisoryHQ study found that the average AUM fee for a $50,000 account was about 1.18% or $590. Many advisors also charge hourly fees of between $100 - $300 and between $1000 - $3000 for special projects.

But for many other Americans, the reason they’ve never enlisted the help of a financial advisor is they simply don’t know where to find one, or how to evaluate their proficiency and pricing.

That’s why SmartAsset created a free quiz to help Americans find and vet qualified financial advisors near them.

This quiz asks about your financial goals, then matches you with 3 fiduciary financial advisors, each legally bound to work in your best interest. You can compare your advisor matches based on their specialty, pricing, and more. You’ll also earn 3 free consultations with your matches, so you can compare them and be fully prepared to pick a financial advisor. The quiz is free and there is absolutely no obligation to work with any of your advisor matches.

Click here to get started.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. The content was purely for informational purposes only and not intended to be investing advice.