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The need to hire a financial advisor for an appropriate savings plan or debt repayment cannot be over-emphasized. Everyone deals with busy schedules every day and therefore, most people don’t have the time to plan how or when to save for their retirement or other needs. As vital as it is to hire a financial advisor, the number of people willing to hire one is limited by the famous “high price tag” associated with the service. Searching through the internet, you will find that most articles associating with payment or hiring a financial advisor are between £1,000 and £3,000; and that may only be the beginning. That is a lot of money that most people cannot readily afford. But, is this price range the standard?
No! There is generally no fixed or general price to hire a financial advisor; the amount a financial advisor will charge will depend on several factors. As a general rule of thumb, the more money that is being invested lowers the premium a Financial Advisor would charge.
How much does a financial advisor charge?
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The fee a financial advisor will charge you will depend on the type of service you require. But, there are general payment methods associated with paying a financial advisor. These payment methods are:
Payment via the percentage of managed asset
This the most common method of paying a financial advisor. With this method, a financial advisor will charge you a rate based on the asset they manage. With this payment structure, the higher the asset, the lower the percentage. The percentage rate charged ranges from 1% to 5% of the total assets the financial advisor is handling. For instance, a financial advisor working with a 3% payment structure, will charge £200 on every £1,000 asset they manage.
Commissions
This is also a common way of paying a financial advisor; financial advisors will provide you with a series of investment advice. The financial advisor will charge you based on the yield of these businesses. It is crucial to find out how much commission your financial advisor will charge if you buy an investment they recommended.
Payment plus commission
Some financial advisors will charge you based on the asset they’re managing and also commissions on the investment you make based on their advice. It is, therefore, essential to find out if your financial advisor works with a fee-only or fee-based model.
Hourly rate
In this payment method, you are paying a financial advisor to guide you on an intended investment. The financial advisor will be paid based on the time he spends with you, with this type of payment method, the financial advisor is not entitled to charges based on your assets or investing in any investment plan they offer you.
Flat fee
This type of payment method is commonly used when you hire a financial advisor for a project. There is an agreement of price between you and the financial advisor, and the financial advisor will not be entitled to any other commission.
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