Financial Advisor Fees & Costs

The method through which a wealth planner gets paid will ultimately determine if they have your best interest in mind.  Ultimately, it will tell you if they are thinking of how to help you, or how to earn more money through you. 

If an advisor is speaking in a way that makes you think they have financial superpowers, stop and take a step back. You didn’t find “the one.” Although they may sound overly confident and smart, they also may be promising things that no advisor in the world can guarantee. 

There are many ways an advisor can charge you, and the one they pick can be very telling of their intentions. There are four common ones: Assets Under Management (AUM), Commission Per Trade, Commission From Sold Products, and Flat Fee. Once you understand how they can each benefit you, it will be easier to navigate your advisor options

When it comes to Advisor Fees, the words transparency and clear rarely come up. The first question you need to ask is “Is this advisor a fiduciary?”

Any advisor that is giving you a “free financial plan” is most likely a commissioned broker. That free plan will almost always lead to a propriety product or insurance product that earns them a commission. That is the cost of the “free financial plan”. When an advisor sells you a product, they are not legally obligated to be working in your best interest.

The good news, by interviewing an advisor from the Zoe Network, you’ll never have that experience. All of our advisors offer clear and transparent fee structures, and are legally obligated to work as fiduciaries for their clients, 100% of the time.

Typically, there are three ways you can hire an advisor in the Zoe Network:

One Time Plan

This is an agreed-upon flat fee to conduct financial planning with a Zoe Advisor to build a financial plan.

Is this the plan for you?

This is ideal if you have a narrow question or decision that needs to be made, or you are very comfortable self-managing your investments, but just want an advisor to help construct a plan.

Fees: We see fees for a one-time financial plan ranging from $1,500-$5,000 depending on your financial situation.

Looking for something more?

The downside of a one-time financial plan is that it is a static document in time. Should your family’s situation change, most likely your plan will need updating. More often than not, families are opting into an ongoing relationship with an advisor so they can build a relationship and allow that advisor to be proactive in protecting their wealth.

Flat Fee Retainer

This is an agreed-upon ongoing flat-fee financial planning retainer to begin a relationship with a dedicated financial planner.

Is this the plan for you?

This is ideal if most of your assets are tied up in workplace retirement plans or stock options. You are younger in your financial journey and in the accumulator phase and would like ongoing guidance on how to save more, invest smartly, and plan for your short-term and long-term goals.

Fees: We see fees ranging from $100 to $500/month for a financial planning retainer

Looking for something more?

The downside of this service is that an advisor is typically not actively managing your assets.

Asset Under Management (AUM)

This is a full-service financial advisor relationship where an advisor conducts ongoing financial planning and investment management for you. This is a percentage-based fee of the assets the advisor manages for you.

Is this the plan for you?

This is ideal if you are transitioning into retirement, or if you do not feel comfortable managing your investments on a daily basis. This is the most all-encompassing and full service you can get from a financial advisor. Most busy families opt into this relationship because of that.

Fees: We see fees ranging from .80% to 1.5% of the assets an advisor manages. For example, if you were to hire an advisor under the AUM fee structure, and they managed $1 million dollars for you, their annual fee would be 1% of those investments, which would equate to a $10,000 annual advisor fee. This is not an out-of-pocket expense, the fees come directly from your investment account.

Looking for something more?

The downside of this service is only if you do not want an advisor managing your assets, or would like to begin in a less all-encompassing relationship. We see families every week start with a One Time Plan or Retainer option to later migrate to an AUM relationship when it makes sense.

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Ask The Right Questions To Avoid Common Red Flags

Having the wrong wealth planner means are working with someone who doesn’t have your best interest in mind. You may lose sight of what’s important to you and find it more challenging to fulfill your financial goals.

If you’re in the process of finding your ideal advisor, make sure you’re on the lookout for the most important advisor red flags to spot before you make any decisions.

Here are some questions you can ask that can steer you in the right direction. 

Having the wrong wealth planner means are working with someone who doesn’t have your best interest in mind. You may lose sight of what’s important to you and find it more challenging to fulfill your financial goals.

If you’re in the process of finding your ideal advisor, make sure you’re on the lookout for the most important advisor red flags to spot before you make any decisions.

Here are some questions you can ask that can steer you in the right direction. 

If the answer is “Yes,” the follow up questions should be “are you associated with a broker-dealer?”  Be aware that advisors associated with a broker-dealer have significant monetary incentives to sell products that might not be in your best interest.

This should be a “No”. Some advisors will say that they do not receive commissions specifically, but they actually still receive backdoor kickbacks that you are paying via 12b-1 fees from mutual fund companies. Those additional fees can range from 0.25% to 1%, which can really add up!

The answer should be “No.” If they receive any type of commission, they will be biased and unable to work in your best interest. 

The answer here should be “Yes.” Just like when you receive your receipt at a restaurant, you want to know exactly what you’re paying for.

If the practice has more than 200 clients per advisor, then its important to find out how much support staff does the advisor have to service the client.  If an advisor has primary coverage of 600 clients, it is fair to assume that they do not offer a high-touch service. Thus, fees should be well below what full-service advisors charge.

 

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