What Do Financial Advisors Do and How Much Do They Cost?
6 Min Read | Last updated: July 10, 2026
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What does a financial advisor do, and how much do they cost? Learn what to expect, how fees work, and what to consider before hiring one.
At-A-Glance
- There are several types of financial advisors, and their main role is to give you financial guidance, helping you manage your money strategically.
- Financial advisors can make their money by charging fees and flat rates, or commissions on the financial products they sell you.
- You don’t have to pay a financial advisor anything before you’ve confirmed their fee structure, specialties, and certifications.
Good financial advice can help you make better financial decisions, reduce your debt, or cushion your retirement. But it can also cost you more than you think, and bad financial advice can be even costlier. That’s why it’s important to choose your financial advisor carefully and understand the tradeoff between what you’re paying and what you’re getting in return.
To paint the big picture of what financial advisors can offer, this article lays out what they do, what they charge, and the pros and cons of working with one.
What Does a Financial Advisor Do?
“Financial advisor” is a general term that doesn’t automatically imply a specific certification or license, but the job, in general terms, is simple: Provide financial guidance. But a financial advisor’s day-to-day can look quite different depending on what type of advising they do.
Here are common types of advisors:
- Certified Financial Planners (CFPs)
A specialized financial planner certified with the CFB board, a CFP can give you tips on retirement investment options, estate planning, investing, retirement, and taxes. They can even support you with more emotional aspects of money, like navigating your financial goals when you don’t see eye to eye with your kids or spouse, or making the best decision about a large surprise inheritance while grieving. - Wealth Managers
These advisors work with people who typically have a minimum net worth of around $5 million, and their job is to help their clients grow that wealth, manage investment risks, and create strategies to pass wealth on to heirs.1 - Investment Advisors
Focused mainly on your investments and anything that may affect them, these advisors may select your investments, decide when to sell them, deal with taxes related to your investment earnings, and manage any investment-related issues that may pop up for you. - Robo-Advisors
These tools aren’t actually human, but they can automate your investing process and build an investment portfolio for you. The best robo-advisors can help you even if your investment funds are limited, since they generally cost less than a human investment broker. - Salespeople
Financial salespeople are often financial advisors with a wide range of financial knowledge, but their main goal is to sell their employer’s financial products (like life insurance or certain loans), and they may not have qualifications like CFPs.
Questions to Ask a Financial Advisor
If you’re considering your options and not sure what kind of financial advisor you’re dealing with, you can ask these questions to get a deeper understanding of the guidance they offer and how much it costs:
- What are your credentials?
- Are you a fiduciary, meaning you have a formal commitment to put clients’ interests ahead of your own?
- How do you get paid — by the amount of assets you manage, by commission, or by another method?
- What are the total fees to purchase, maintain, and sell the investments you recommend?
- What are the ongoing fees to maintain my account?
What’s The Cost of a Financial Advisor?
Just like financial advisors’ knowledge and experience can vary widely, so do their fees and overall costs.
Here’s how financial advisors make their money while helping you with yours:
- CFPs
You may be charged hourly rates of $100-$300 or more, an annual retainer fee as high as $4,000, a one-time fee of around $2,000, an annual percentage of your investments (maybe up to 1%), or a combination of all.2 - Wealth Managers
You’ll commonly see flat-fee or percentage-of-assets compensation arrangements, so the true cost of a wealth manager can vary widely. - Portfolio Managers
If you’ve nabbed a seasoned, successful portfolio manager, you can probably expect to pay them at least 1% of your assets each year.3 - Robo-Advisors
You can expect to pay low fees for these little guys (often as little as 0.25 percent of the amount you invested).4 - Financial Salespeople
Since they’re commission-based, it’s hard to say exactly what you’ll pay a salesperson, but it could be a high price that isn’t baked into the product’s price.
Once you know how much you’ll pay and what you’ll receive in return, understanding the risk involved with advisors can help you make a final decision.
The Benefits and Risks of Hiring a Financial Advisor
Financial advisors can’t 100% guarantee that they’ll help make you money or achieve your financial goals, and you can save and invest without them. However, a trustworthy financial planner can be worth far more than their costs, helping you look at the big picture and guiding you through budgeting, how to pay for college, tax issues, retirement planning, and major life events like marriage or family planning.
But a financial advisor may not always be worth their fees. Advisors solely motivated by commissions or large compensations may make recommendations for expensive services that you don’t need.
| Advantages | Disadvantages |
|---|---|
| Their strategies may help boost your wealth | Fees may be high or confusing |
| They can provide support and accountability as you work toward your goals | You may have to research their qualifications and certifications |
| They can manage your investments when you don’t have the time or knowledge to do so | You may run into advisors with personalities or investment styles that are too different from your own |
Frequently Asked Questions
The biggest red flags when you’re working with a financial advisor may include being unable to verify their certifications or if they’re charging you frequent or surprise high fees. Additionally, if your advisor is constantly pushing financial products, pressuring you to make investments quickly, or guaranteeing you anything, you may want to consider dropping them. These behaviors are likely to contribute to a gut feeling that something isn’t right.
It’s true that many traditional advisors might require that you have investable assets equating to several hundred thousand dollars before working with you, but there’s no universal official income that benefits from financial advising.5 Many financial planners don’t require minimums and can still teach you a lot about money management, even if your salary is humble.
The Takeaway
Financial advisors can hold different certifications and specialize in different areas, but their job is to provide clients with financial guidance, whether that involves retirement planning, investments, budgeting, or saving. No matter which type of financial advisor you end up with, they should provide transparent fees and help you reach your financial goals. They typically charge for their services, but those costs can be worth it if they can help you get ahead.
1,5 “What Is Wealth Management and Is It Right for Me?,” Experian
2 “What Is a Certified Financial Planner?,” Experian
3 “Am I Overpaying a 1% Fee on My $2.2 Million Portfolio?,” Yahoo! Finance
4 “What Is a Robo-Advisor?,” Experian
Karen Lynch is a journalist who has covered global business, technology, finance, and related public policy issues for more than 30 years.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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