ETFs & Funds
Home›ETFs & Funds›Fund Industry›Advisor fees: how a 1% charge compares with low-cost i…
Advisor fees: how a 1% charge compares with low-cost index investing
The article uses a $2.2 million portfolio to illustrate how a 1% annual advisor fee would work versus a 0.02% representative fee for a well-indexed S&P 500 fund.
Yahoo Finance, via SmartAsset, frames the cost of financial advice around two figures, 1% as a common average fee for comprehensive advisor services and 0.02% as a representative fee level for a well-indexed S&P 500 fund used for comparison.
It then walks through fee tradeoffs using an example of a $2.2 million portfolio managed by an advisor charging 1%, describing that the price could be reasonable depending on what services a client wants, such as investment management and ongoing financial planning.
The piece outlines four major advisor fee structures financial advisers typically use, including fee-for-services, fixed project fees, hourly billing measured in six-minute increments, commission-based compensation tied to transactions, and performance-based compensation tied to meeting specified financial benchmarks.
It also describes an asset-based percentage model, where advisors charge a percentage of the assets they hold and manage on a client’s behalf, and notes that advisors often combine multiple fee structures depending on the services provided.
Latest closeS&P 500 7,765.36 ▼0.5%