Personal Finance
The Cost of a Financial Advisor for $1M+ Portfolios
From a brand partner: At higher net worth, the value financial advisors may provide could potentially outweigh the costs.
As wealth grows, financial decisions tend to become more complex, and more consequential.
For investors with $1 million or more, the question may not be whether advice has a cost, but whether it meaningfully improves outcomes after taxes, risk, and time are considered.
Understanding how advisory fees typically work at higher asset levels may be able to help you evaluate whether professional financial advice might be appropriate for your situation.
If you know the value an advisor could potentially provide may outweigh the associated costs, you can get matched with a fiduciary financial advisor using our no-cost matching tool. Click here to get started.
How Advisor Fees Typically Work for $1M+ Portfolios
At higher asset levels, how advisors charge, and what they include, may change materially.
Common fee structures include:
- Assets Under Management (AUM):
- An ongoing percentage of assets managed. For portfolios above $1 million, the effective rate can potentially decline as assets grow.
- Flat or Project-Based Fees:
- Commonly used for financial plans, second opinions, retirement analysis, or tax-focused work.
- Hourly Fees:
- Applied for targeted advice or limited-scope engagements.
Fee levels, services, and legal obligations may vary by advisor. Reviewing an advisor’s Form ADV and Client Relationship Summary (CRS) can be an important step before working with one.
Are Advisor Fees Worth the Cost?
SmartAsset investigated the relationship between the cost of an advisor and their potential value.
The result?
Advisor fees, generally ranging from 1% to 0.75% annually depending on net worth of the client, made up an estimated 23.0% to 35.4% of the total value surplus generated by the client-advisor relationship.1
Why Fees Alone May Not Tell the Full Story
For high-net-worth investors, advisor value may not be driven by investment selection alone.
In practice, meaningful advisor value may also come from:
- Tax-aware portfolio and withdrawal strategies
- Coordination of investments with estate and legacy goals
- Risk management during market volatility or life transitions
- Behavioral discipline that may help avoid costly mistakes
Even modest improvements in tax efficiency or risk control can potentially help outweigh advisory fees over time. But outcomes are never guaranteed.
In fact, SmartAsset’s proprietary model reveals that clients working with a financial advisor could potentially see an estimated 36% to 212% more dollar value to investors’ portfolios over a lifetime, depending on multiple unique, individual factors.1
Evaluating the Value of Professional Advice
For investors with seven figures or more, the cost of financial advice may not be the most important consideration.
The more meaningful question might be whether professional guidance helps improve potential after-tax outcomes, risk management, and long-term decision-making as financial complexity increases.
If you’re evaluating whether professional guidance could potentially improve your tax efficiency, risk management, or long-term planning, speaking with a fiduciary financial advisor may help clarify your options.
That’s why we created a free tool to help match you with vetted fiduciary financial advisors who serve your area, each legally bound to work in your best interest.
It's never too late to plan to work toward a comfortable retirement. Get your financial advisor matches today.
This is a hypothetical example and is not representative of any specific security. Actual results when working with a financial advisor will vary.
This scenario is for illustrative purposes only and does not represent an actual client. Results may vary.
This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). Past performance is not a guarantee of future results. There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.
SmartAsset.com is not intended to provide legal advice, tax advice, accounting advice or financial advice (Other than referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your accountant, tax, or legal advisor with regard to your individual situation.
SmartAsset Advisors, LLC ("SmartAsset"), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset receives compensation from Advisers for our services. SmartAsset does not review the ongoing performance of any Adviser, participate in the management of any user’s account by an Adviser or provide advice regarding specific investments.
We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.
Sources:
1. “The Value of a Financial Advisor: What’s It Really Worth?” SmartAsset (Nov. 2024)
