Financial advisors are people and services that help you create a plan for meeting your financial goals and manage it along the way. With the help of a financial advisor, you could reduce your debt, save more and invest in ways that might not have been possible if you did it on your own.
However, there are several types of financial advisors and they all offer differing levels of support. Learn here what an advice-only financial advisor does and how much one may cost.
A trusted financial advisor could help you plan for retirement and help you select investments that align with your financial goals. Find an advice-only advisor today.
What Is an Advice-Only Financial Advisor?
Financial advisors offer many levels of financial support to potential clients, and many times the degree of support is related to the manner in which they are paid. Advice-only advisors form 0.1% of financial advisors, and unlike other financial advisors, they do not receive commissions or manage your assets for you.
Other financial-advice models that financial advisors may follow include commission, commission and fee (often called fee-based), and fee-only models. Fee-only and advice-only advisors are strongly preferred since they are commonly certified fiduciaries, professionals who put the client’s financial best interests first.
An advice-only model is also known as fee-for-service financial planning. Advice-only advisors are similar to fee-only advisors, in that they aim to minimize potential conflicts of interest. Under a commission model, a financial advisor may seem like a sales agent, pushing products that could pay him or her a higher commission but may not be the best fit for a client’s objectives. Under a fee-only model, however, a financial advisor may prioritize asset management rather than advice, since fee-only advisors usually charge a set percentage of assets managed as their payment. Advice-only is just that–advice for a price.
What Services Do Advice-Only Financial Advisors Provide?
Advice-only financial advisors help everyday people plan their finances. Some financial advisors clients aren’t interested in having an investment advisor manage their assets but would like professional guidance on actions that they can implement on their own. That’s where advice-only advisors come in.
Because advice-only advisors are not incentivized to recommend products or services, this type of financial advisor is able to create a truly customized plan for their clients. They’re able to explain why a particular mix of products or services can help the client achieve his or her financial goals faster, and they can do so without bias.
Some advice-only advisors specialize in certain service sets, so be sure to ask if you speak to one. Common services and advice offered include:
- Budgeting/cash flow coaching
- Creating financial routines
- Salaried vs commissioned employees’ needs
- Unique types of compensation, such as restricted stock units or options
- Planning to buy a house, start a family, or pay for tuition
- Defined benefit pensions and retirement plans
- Divorce or separation
- Low-cost investment planning
- Tax and benefit planning
- Different types of investing strategies
- Dual citizens
- Estate planning
How Much Do Advice-Only Financial Advisors Cost?
Advice-only financial advisors charge on a flat-fee basis. A 2018 Kitces Research study indicates that 27.5% of financial advisors charge flat fees, with the average hourly fee being $220. Most advice-only financial advisors charge a median standalone fee of $2,400 for a full financial plan but this ranges depending on the complexity of the client’s situation.
For example, Kind Wealth in Canada offers a comprehensive financial planning package starting at $1,000, which they charge in monthly installments. They also offer investment consulting without asset management, for which they charge 1% of your investment portfolio value.
Some advice-only advisors also offer a retainer contract, charging ongoing fees for an ongoing financial planning relationship rather than a one-time fee transaction. According to the study, these retainer fees had a median fee of $5,000 a year.
Bottom Line
Advice-only financial advisors are fee-for-service planners who help everyday people plan their finances for a financially-stronger future. As a result, they can charge by the hour for financial advice or by project. Depending on the degree of support you may need, your price may range accordingly. Always be sure to ask what services your potential advisor offers, since some advice-only financial advisors specialize in specific areas that may be more appropriate for your situation.
Tips for Building Wealth
- Not sure what investments and strategies will help you meet your long-term goals? For a solid financial plan, consider speaking with a qualified financial advisor. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Use SmartAsset’s free investment calculator to get a good estimate of how to grow your money over time.
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