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“I don’t have a lot of money but would love to hire a financial advisor. How do I do it?” It’s a question that we, as personal finance journalists, get frequently. Many people think that a financial advisor is out of reach for them financially because they don’t have much in the way of savings and investments. Indeed, often advisors charge about 1% of assets under management, and may require you to have a certain level of assets, like $100,000, before they will work with you. But here’s how to find a planner who’s more affordable. (This tool can help you get matched with a planner who meets your needs.)
Negotiate everything
Advisor fees are often negotiable, so ask what the advisor can do so you pay less. You may want to suggest annual meetings versus quarterly ones, which limit the amount of time an advisor spends with you, giving grounds for a reduced fee. Or you may want to inquire about a discount on services they provide that you’re not receiving or that you don’t need.
Ask about a junior advisor
If you’re talking to an advisor and their prices are too high for you, ask if there is someone else good on their team who may charge less. Advisors may have a more junior advisor on their team who might charge a lower hourly rate. Note that if you do find a financial advisor willing to for less, it’s important to confirm their legitimacy. “This goes back to researching the individual. Also, it’s true that a more seasoned advisor with certifications will have a higher rate. This is not to say that advisors who charge less or nothing cannot give good advice,” says Grace S. Yung, a financial planner at Midtown Financial Group.
Inquire about package deals or other ways to save money
Ask if the advisor might be able to offer you a package deal or some other deal that could help you lower the cost. “At times, I myself have done pro bono work to help individuals who cannot afford to hire a financial advisor,” says Yung. (This tool can help you get matched with a planner who meets your needs.)
Look for flat fees and hourly rates, if it makes sense for you
Some advisors work for an hourly or flat rate that can be negotiable, explains Yung. Sometimes those hourly fees are quite reasonable: Financial planners from networks like XY Planning Network and Garrett Planning Network may charge under $200 an hour, so if you have specific one-off questions this could be a relatively affordable option for you. And according to data from SmartAsset, financial advisors generally charge a flat fee of $1,500 to $2,500 for the one-time creation of a full financial plan that includes budgeting, investing retirement planning, estate planning, tax planning and risk management. That plan could last you for years to come
Consider a robo-advisor, especially if it has access to human advisors too
“Robo-advisors provide simplified, low-cost investment management using a digital platform and computer algorithms. In addition to low costs, many have no or low account minimums and provide professional investment management for any asset size,” says Tiffany Lam Balfour, investing spokesperson for NerdWallet. Some robo-advisors like SoFi, provide either free or low-cost access advisors. “Depending on the provider, these services can be an hourly cost or have varied costs and account minimums. Usually they will cost less than a traditional, in-person financial advisor,” says Lam-Balfour.
Look beyond just the on-paper rate
Paying for a financial advisor doesn’t mean you’re off the hook for trading fees, fund fees and expense ratios. Make sure you understand the full cost of doing business with your financial advisor. (This tool can help you get matched with a planner who meets your needs.)
