The Financial Advisor Fee Calculator helps those interested in or using a financial advisor calculate the total cost of fees throughout the advising relationship and net value added (or lost) by working with a financial advisor.
Use this calculator to compare the costs of different financial advisor fees, including flat fee, AUM, or hybrid (Flat fee + AUM) cost structures.
Note: This calculator is for informational purposes only and does not constitute legal or tax advice.
How much do you currently have invested?
How much will you invest each year?
Are you retired now?
What is your current age?
At what age do you plan to retire?
What rate of return do you expect to earn on long-term investments?
What advisory fee scenario would you like to analyze?
Advisor’s fee as a percent of assets (AUM)? (%)
Advisor’s annual flat fee? ($)
Expected annual increase for flat fee? (%)
Do you feel confident in your ability to identify low-cost funds, ETFs, and investment platforms consistently over time?
Will you remember to rebalance your portfolio at least once per year?
Will you avoid selling or decreasing your stock exposure during market downturns, even when markets decrease by 50% or more?
Will you place investments in the optimal account type for tax efficiency (Roth, Traditional, brokerage)?
Will you consistently choose the optimal cost basis (FIFO, LIFO, SpecID) when selling, and will you always select the right account to withdraw from when you need money?
Will you regularly review spending to cancel unused subscriptions for yourself and your partner?
Do financial conversations regularly cause stress or tension in your relationship?
| Hypothetical portfolio value at age (unadjusted, assuming no investing mistakes are made) | |
| Hypothetical portfolio value at age (adjusted downward for the potential cost of investing mistakes based on answers above) | |
| Hypothetical portfolio value at age (adjusted downward for advisor fee, assuming no investment mistakes) | |
| Cumulative Potential Cost of investing mistakes until age (using estimates from Vanguard Advisor's Alpha™ paper) | |
| Cumulative value added from assistance cancelling unwanted subscriptions through age | |
| Cumulative value added by reducing relationship stress through age | |
| Total cumulative advisor fee paid through age | |
| Total cumulative advisor value added through age | |
| Net value added by advisor after adjusting for fees |
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Understanding Financial Advisor Fee Structures
When choosing a financial advisor, it's important to understand how you'll be charged. Different advisors use different fee structures, each with pros and cons depending on your financial situation and preferences. Here's a quick breakdown:
- Assets Under Management (AUM): This is one of the most common models. The advisor charges a percentage of your investment portfolio—say, 1% per year. As your portfolio grows, the total fee may increase, but the percentage often decreases at higher asset levels.
- Flat Fees: Instead of a percentage, some advisors charge a flat annual fee—like $5,000 per year—regardless of how much you have invested. This can make costs more predictable, but remember that many advisors will increase this fee over time to account for inflation or additional services.
- Hybrid Fees: Some advisors combine both approaches, charging a base flat fee plus a smaller AUM percentage. This model aims to balance predictability with scalability.
Understanding these models can help you better compare advisors and assess the value you're getting for the fees you pay.
Financial Advisor Fee Calculator FAQ
The Financial Advisor Fee Calculator helps you estimate the total cost and potential value gained or lost when working with a financial advisor over your investing lifetime. It compares different fee structures, such as flat fees, assets under management (AUM), and hybrid models (flat fee plus AUM).
This calculator is useful for anyone currently working with or considering a financial advisor. It's particularly useful if you want to compare various advisory fee structures or understand the potential long-term financial impact of advisor fees and investment decisions.
The calculator compares three common fee structures:
1. Assets Under Management (AUM): Fees based on a percentage of your portfolio's total value.
2. Flat Fees: A fixed annual fee, potentially adjusted yearly for inflation.
3. Hybrid Fees: A combination of a flat fee and a percentage-based AUM fee.
Not necessarily. Although flat fee models seem simpler and initially less expensive, providers typically increase these fees over time due to inflation and rising costs. This is why the calculator includes an input for the “Expected annual increase for flat fee,” helping you make more accurate comparisons.
No, the calculator is designed solely for informational purposes. It does not constitute financial, legal, or tax advice. Consult with a qualified professional for personalized recommendations.
The calculator estimates the costs associated with common investing mistakes, like emotional trading, failing to rebalance regularly, poor tax efficiency, or unnecessary subscription expenses. These estimates are informed by research, such as Vanguard’s Advisor's Alpha™ study, which quantifies typical investor mistakes.
“Net value added by advisor” refers to the total value created by a financial advisor's services, such as avoiding common investment errors or unnecessary expenses, minus the cumulative cost of the advisor’s fees. A positive net value means the advisor potentially adds more value than their cost, while a negative value indicates the fees may outweigh the benefits.
These questions help estimate intangible benefits and behavioral savings an advisor might provide, such as maintaining disciplined investment practices, optimizing tax strategies, reducing unnecessary subscriptions, and improving relationship dynamics around financial decisions.
The “hypothetical portfolio value” shows an estimated future account balance at retirement age, calculated based on your current assets, ongoing investments, and anticipated investment returns. It adjusts these figures to reflect potential costs due to common investing mistakes and advisor fees.
No. The calculator provides hypothetical scenarios based on user inputs and historical data averages. Actual investment outcomes can vary significantly based on market conditions, personal behaviors, and unexpected events.
The calculator's projections are based on simplified assumptions and historical averages. While they provide valuable insights, actual outcomes may differ due to market fluctuations, personal financial decisions, and changing tax laws or fee structures.
