Millionaires are generally accepting of financial advisor fees and feel they get a valuable service in return, according to Millionaire Corner research that finds appreciation of financial professionals increases with wealth.
Financial advisor fees can be structured in several ways, according to the Financial Planning Association or FPA. Advisors may charge commissions on the financial products they buy and sell on behalf of clients, and they may charge a flat or hourly fee for financial planning services. Some financial advisor fees are based on a percentage of assets under management. According to the FPA, fees based on assets under management averaged .90 percent in 2009.
Millionaires tend to prefer fees to commissions, according to our research.
Sixty-percent of Millionaires – compared to 55 percent of non-Millionaires - are very comfortable with the fees they pay their advisors, according to our third-quarter study on the relationship between financial professionals and their affluent clients. We’ve also found that the share of investors who indicate financial advisor fees are “very expensive” decreases with wealth level. Forty-three percent of Millionaires with a net worth exceeding $25 million indicate the services of a financial advisor are costly, compared to 58 percent of non-Millionaires, who have $100,000 up to $1 million to invest.
Millionaires are also more likely than non-Millionaires to perceive benefits to working with a financial advisor, according to our monthly poll for October. Three-fourths of Millionaires indicate working with an advisor improves their knowledge of investment, and 68 percent indicate the relationship provides a wider range of investment opportunities. Nearly two-thirds of Millionaires indicate working with an advisor improves their investment returns.
Learn more about the top three advantages of using a financial advisor.
A smaller share of Millionaires perceives financial advisor fees as a disadvantage to the relationship.