I Have $1.7M Invested With My Advisor and I Pay a 1% Fee. Am I Paying Too Much?

When it comes to financial advice, what you pay depends on what you get. An advisor who simply uses a passive S&P 500 index fund may not be worth a 1% fee. Meanwhile, an advisor who helps you manage taxes and cash flow, plan for retirement and save for your child’s college education is likely worth significantly more. 

For example, say you have $1.7 million invested with a financial advisor. A 1% fee falls within the industry average. However, whether you’re getting a good deal depends entirely on your advisor’s skill and services. 

If you want to work with a financial advisor but don’t know where to start, try SmartAsset’s free tool.

What Are Advisor Fees?

Financial advisors offer several different fee structures.

• Hourly. An hourly fee is a fixed rate for every hour an advisor works.
• Fixed. A fixed fee is a predetermined amount that you pay for a specific service.
• Percentage of AUM. A percentage of AUM means advisors receive a variable rate based on a percentage of total assets under management (AUM). Advisors typically bill this asset-based fee annually or quarterly.
• Commissions and performance fees. Commissions are fees your advisor receives for specific trades or transactions they make. Meanwhile, performance-based fees apply when they meet certain goals.

Today, fees that are based on a percentage of a client’s AUM are the most common type of advisory fee. A 2025 Kitches study found that AUM fees were the majority revenue source for 86% of financial advisors surveyed. ¹

Here’s how they work: An advisor charges 0.5% annually, and they manage a $100,000 portfolio. At the end of the year, you would have paid $500 ($100,000 * 0.005) in management fees. These can sometimes be easy to miss because advisors may withdraw them directly from your brokerage account.

Fixed and hourly rates are more common for advisors who perform specific services. For example, say a financial advisor does your taxes or makes a plan for college savings. In this case, they may bill by the hour or charge a flat rate for those services.

For help finding the right financial advisor, consider using this free matching tool.

What Do You Get For Your Fees?

Financial advisors can provide a range of services.

Flat- and hourly-fee structures generally surround specific deliverables. For example, some advisors will help you to create a tax strategy, a household budget or an overall financial plan. It’s also common for a financial advisor to offer a comprehensive range of financial services based on your specific goals.

AUM-based fees typically relate to ongoing portfolio management. Advisors who manage client portfolios typically select investments based on a pre-determined investment strategy. Percentage-based fees seek to align your advisor’s incentives with your own. The more they grow your money, the more assets they will have under management. Their fee often grows in response. 

That said, higher fees do not always translate to better results. As a prospective client, you should carefully review the fee schedule to ensure you understand how fees work.

If you want comprehensive financial services, how much does the advisor charge for each deliverable? If you want money management, how have their portfolios performed year-over-year? Make sure you’re getting value for your money because even small percentage fees can add up.

AUM-based advisors charge a percentage of your portfolio, offering an alternative to product-driven compensation. If you’re weighing the cost, use this calculator to estimate whether the impact of advice could outweigh the fee.

What Should You Pay?

The typical percentage-based fee often cited is 1% of AUM. However, average portfolio management fees range from 0.2% to 2.0% of AUM. ²

The exact advisor fee you’ll pay can depend on several factors, including the services bundled within that fee. For example, a financial advisor may charge more if the AUM fee also includes tax preparation and financial planning. However, they may charge less if the fee only accounts for portfolio management.

Robo-Advisor Fees

One option that tends to be cheaper is a robo-advisor. This is a digital platform that manages your portfolio automatically using an algorithm. These services generally charge between 0.25% to 0.50% percent of assets under management. ³  

However, a robo-advisor also offers fewer services for its low fees. It will manage your portfolio based on specific metrics but generally can’t offer customized services like tax advice. 

Asset-Based Discounts

For a wealthy household, it’s also important to consider asset-based discounts. Many financial advisors use graduated fee schedules with lower rates for larger sums.

For example, an advisor may charge a 1.5% fee on the first $250,000 in a portfolio and 1% on the next $250,000. That advisor could charge just 0.75% to manage the next $500,000. This means a $1 million portfolio would qualify for a discount based on its sheer size.

If you have $1.7 million with 1% in advisor fees, the fees total $17,000 annually. Therefore, it’s critical to ask what you’re getting for your money. This way, you can determine whether the fees are reasonable based on the services you receive and advisor satisfaction.

Fee Mistakes That Quietly Reduce Your Returns

Many clients commit to an advisor without requesting a written fee schedule that itemizes all services.

AUM Fees

An AUM fee that appears to cover everything may in fact cover only portfolio management. There may be separate charges for financial planning, tax preparation or estate planning consultations. Finding out about these costs after the fact can significantly increase annual expenses beyond what you originally expected.

The underlying investment expenses inside your portfolio are easy to overlook because they do not appear on your advisor’s invoice. Every mutual fund and ETF charges its own expense ratio. This is deducted from the fund’s returns before reaching your account.

If your advisor charges 1% and your average fund expense ratio is 0.50%, total annual costs are closer to 1.50%. On a $1.7 million portfolio, that amounts to an additional $8,500 per year that no single statement includes.

Not Shopping Around

Staying with a high-fee advisor out of comfort or habit is one of the most common and most expensive mistakes. An advisor who was the best option five years ago may no longer be the best choice for today’s needs.

The advisory landscape has changed significantly in the past decade. Alternatives like flat-fee planners and low-cost robo-advisors provide comprehensive financial guidance at a fraction of traditional AUM-model charges.

Not Comparing Options

There is also a widespread assumption that paying more for advice produces better investment results. Research has consistently shown the opposite. Higher fees create a drag on returns that compounds over time.

Additionally, advisors charging premium rates do not reliably outperform lower-cost alternatives. The value of a good advisor is real. However, it tends to come from planning, tax management and behavioral coaching rather than from superior stock picking. If your advisor’s primary contribution is managing a portfolio of index funds, you may be paying significantly more than that service requires.

Finally, it is important to compare advisor costs to know whether your fee is reasonable. Request a breakdown of your total annual cost, including the advisory fee, fund expenses and any transaction or platform charges. Then compare that number to what a flat-fee planner or robo-advisor charges for similar services.

This will give you a concrete basis for evaluating whether the relationship is worth continuing at its current price.

Bottom Line

On average, financial advisors charge between 0.2% and 2.0% of assets under management for their asset management. At 1%, an advisor’s fee is well within the industry average. Whether that fee is too much or just right depends entirely on your needs, the advisor’s services and overall performance.

Tips for Picking an Advisor

• Is it worth paying a financial advisor 1%? This small percentage can add up over time, so be sure to review what you receive in exchange for these fees. 
• Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area. You can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

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