If we are to answer the question, “How much does it cost to hire a financial advisor” then an investor could budget from $7,000 to $50,000 per annum.
Moreover, there is no stipulated amount but whatever the cost, it would be lesser than the services the professional is ready to give to the client.
Most investors who hire a financial advisor would assure you that entrusting your financial affairs to them could save you a lot more than what it cost.
Often when an investor is unable to manage his or her financial affairs due to unending business appointments and schedules. The need to hire a financial advisor arises.
Then at the thought of this, the question also arises “How much does it cost to hire a financial advisor?”
There are no laid down rules regulating the fees these professionals could charge. The most important thing is rendering a good service to your client.
The Cost of Hiring a Financial Advisor?
Financial advisors all have different amount of fees each could charge. Some experts would charge according to the number of assets the investor has.
Now according to the number of assets calculated, the charges could be on percentages or flat rates.
However, many investors who understand the importance of hiring a financial advisor would prefer that the expert work with transparency and honesty.
For this reason, they would have no objection to the charges the advisor proposes.
On the other hand, the financial advisor may charge a high fee but promise to be straightforward and just in dealings with clients.
This would help to retain goodwill and leave good impression marks about his or her career. Many investors might be keen to know the fee at the initial stage in other to budget a specific amount of money.
Generally, it might not be possible to state specifically how much it costs to hire a financial advisor. This is because every advisor has its fee, which both (the advisor and the investor) get to discuss together and reach a final agreement.
Although as time goes on, seeing how industrious, diligent, and trustworthy the financial advisor may be, the investor might decide to increase the fee.
The investor may also try to give a reward or compensation to show acknowledgment. Therefore, the most important thing is that the investor sees the value of their fee in the advisor they hire.
6 things that determine the cost of hiring a financial advisor
Although an investor might not ascertain from the appearance of the advisor the level of competence. But some certain features have to be visible as background evidence.
1. The certificate and degree of the advisor
Usually, an investor cannot just accept anyone who claims to be a financial advisor to take control and management of things.
The investors look out for degrees and certificates representing the completion of courses.
For instance, a certificate from a chartered financial planner or registered investment advisor could be evidence. The client has to take a proper examination of this credential and be satisfied with it.
2. How proficient it is for the advisor to use figures
Ordinarily, financial advisors may not need to be experts in algebra and logarithms but a good knowledge of simple arithmetic will be of importance. There is also financial mathematics which may deal with reasoning. Arbitraging is also important.
3. Ask for areas of work experience
As is normally the case, the advisor must have worked with other firms, which might be relatively small-size firms. Where the managers and directors of such firms would assign duties based on a career path.
They could also work with small individual business owners which can promote their experience in the field.
4. Is the advisor financially literate
This aspect entails displaying skills and abilities. Here the ability of the advisor to make concrete and guided decisions is important.
The ability to manage cash inflow, expenditure, cash outflow, and budget is also essential. Again, the ability to help clients manage overall income to balance with expenses can help identify the advisor’s competency.
5. Can the advisor grow your finances?
The investor might be someone whose finance is suffering a setback. It can only take a good financial advisor to revive it and set it on track again.
There are many things to put in place such as proffer the right decision to take. Again, issue advice on what other sources of income could bring in revenue.
6. Can you trust the advisor for confidentiality?
Keeping secrets is one attribute of a qualified financial advisor. It helps to build confidence and belief in the client. Knowing that the advisor can handle all financial affairs without the knowledge of a third party.
Once the advisor is able to prove worthy in this aspect then the investor may not consider the cost but the value.
Is there any other cost to hiring a financial advisor?
Sometimes you might not only get the answer to what it cost to hire a financial advisor but will also have some proceeds.
For instance, the advisor might enlighten you on the need to plan on making profitable investments, which can increase your revenue.
At this, the investor pays for brokerage fees and other costs related to the account. Therefore it is important that the advisor explains properly to the investor other costs incurred apart from the cost of hiring a financial advisor.
How to minimize the cost of a financial advisor
Investors who are just starting out, maybe for the first time may decide to start with a low fee due to the low amount in their account balance.
Thinking about this, a financial advisor may not be in a position to minimize the charges. All because you can physically ascertain his performance.
The best option then becomes to hire a Robo advisor that can charge a low fee. Between a Robo advisor and a traditional advisor, there is a difference.
The traditional advisor is human and can interact with you as much as you want and you can read expressions as well. While with a Robo advisor, your chances are limited.
The bottom line
You can decide to be a financial advisor for your financial activities but the fact lies in how proficient you are. In the process of trying to avoid the cost of hiring an expert, you may tend to lose it all.
A wise decision could be to shun what it will cost to hire a financial advisor and get a valuable service that will boast your financial progress