Fees are one of the most debated areas in the financial planning world. And it's no surprise - fees impact your short- and long-term wealth.
That's a big difference! Can a financial advisor add enough value to make up for the higher fees?
Vanguard published a study titled Advisor's Alpha to determine how much value a financial advisor can add. In summary, Vanguard estimates that a skilled financial advisor can add about 3% in net annual value to a client’s portfolio over time through behavioral coaching, rebalancing, asset location, withdrawal Strategy, and more.
It’s frustrating - and honestly, disheartening - to see people paying 1% or more in advisory fees only to be dropped into the same model portfolio as everyone else… and then barely hear from their advisor again.
No tax planning.
No proactive advice.
No coordination around retirement, Social Security, insurance, or equity comp.
Just a generic portfolio and silence.
If that sounds like your experience, here’s the reality:
You’re probably overpaying - and getting very little in return.
Fees aren’t the problem. Fees without value are.
A true advisor should be a thinking partner - helping you navigate decisions, avoid mistakes, and move confidently toward your goals. You deserve more than a cookie-cutter investment strategy.
While each type of financial advisor has their own approach to fees and there’s no one-size-fits-all, here are three universal truths:
Let’s walk through the most common ways financial advisors charge for their services:
Advisors earn money only when you buy a financial product from them - like a real estate agent gets paid when you buy or sell a house. The commission is typically a percentage of the product cost.
For example, if you purchase a $1 million annuity with a 5% commission, the advisor earns $50,000.
Commissions often come from products like:
Sometimes a financial advisor who earns commissions will offer a “free financial plan” and at first glance, that sounds like a great deal.
But be cautious - if the plan is built around selling a specific product, the advice may be more about justifying the sale than serving your best interest.
A financial plan should lead to the right solutions - not the other way around.
✅ Upsides:
⚠️ Downsides:
🚀 Quick Tip: Even DIY investors pay hidden fees like bid/ask spreads when trading through discount brokerages for connecting the buyer and seller.
You pay directly for advice, either by the hour or per project.
✅ Upsides:
⚠️ Downsides:
You pay a flat annual fee (billed monthly or quarterly) for ongoing advice and implementation support.
✅ Upsides:
⚠️ Downsides:
🚀 Quick Tip: Flat fee models often allow more flexibility - like choosing managing your investments on your own, but still getting advice from the financial advisor
Most common. You pay a percentage of the assets your advisor manages. For example:
Typical fee range: 0.75% to 1.5%, with discounts at higher asset levels.
✅ Upsides:
⚠️ Downsides:
Important Reminder: Low-cost robo-advisors may charge as little as 0.30%, but they often offer limited or no human interaction. They also typically only invest your money with limited value added to areas like financial, tax, estate, business, and insurance planning.
Every fee structure has pros and cons. The key is to understand how you’re being charged, whether that fee makes sense for your situation, and if the advisor adds enough value to justify it.
Value doesn’t just mean "beating the market." It means:
Beware of anyone promising big returns. Instead, look for an advisor focused on what they can control: tax efficiency, planning, cost management, and personalized advice.
A record number of Americans are turning 65 this year. Robinhood Snacks broke this down:
"The Sandwich Generation will pay... As retiree numbers climb, so does the number of Americans caring for both their parents and their children. About 1 in 4 U.S. adults supports a parent age 65+ while also raising a child. Straining the situation: U.S. debt is at record highs, and without congressional action, Social Security is on track to be depleted by 2033."
“Our lives begin to end the day we become silent about the things that matter.”— Martin Luther King Jr.
Ready to Take Off?
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Life is short and time is precious. Thanks for taking yours to read this and I hope to be a part of your Financial Takeoff!
Disclaimer: This is just for informational purposes and should not be used or viewed as tax, legal, or financial advice. Work with your tax professional, legal professional, and financial planner to evaluate which strategies would be the best for your situation.