The Real Cost of Financial Advice—And Why It Shouldn’t Be This High

Are You Paying Too Much for Financial Advice?

When you think about paying for financial advice, you might assume you’re only paying a single fee, maybe a small percentage of your assets. But the reality is often more complex—and more costly. Many clients are paying far more than they realize once you add up the all-in costs of advisory services, including not just the visible fees but also hidden ones like platform fees, fund expenses, and broker charges. Shockingly, the combined total can often reach or exceed 2%.

In an age when low-cost technology can deliver incredible efficiency, it’s time to ask why so many advisors are sticking to high-fee models that ultimately reduce your returns. If you’re paying 2% or more, it’s worth re-evaluating if you’re truly getting the value you deserve or if there are smarter options that keep more money in your pocket. Let’s break down the typical fees, examine their impact on your wealth, and consider alternatives that prioritize transparency and affordability.

To know if you’re paying a fair price, it’s essential to understand what you’re actually being charged. Here’s a breakdown of typical fees associated with traditional financial advice:

1. Assets Under Management (AUM) Fees: This is usually the primary fee. Many advisors charge a percentage—often around 1%—based on the total assets they manage for you. While it’s transparent, it’s also high when you consider the additional costs.
2. Broker Fees: If your advisor also facilitates the buying and selling of securities, they may be adding brokerage fees. These fees can vary widely depending on the broker they use and the trading volume.
3. Platform or Custodial Fees: Financial platforms used by advisors come with their own costs, often passed on to clients as a platform or custodial fee. These fees help cover the cost of managing accounts but can add up quickly.
4. Fund Fees: If you’re invested in mutual funds or ETFs, each fund has its own management expense ratio (MER). Even seemingly small percentages, like 0.5% to 1%, compound over time and cut into your returns.

Combined, these fees can total 2% or more of your assets annually. To put that in perspective, if you have $500,000 invested, you’re paying around $10,000 per year. When compounded over years, these costs can eat away at tens or even hundreds of thousands of dollars in lost growth.

Many clients assume that 1-2% in fees won’t make a big difference. But let’s take a closer look. Imagine two investors, both starting with $500,000, who receive the same annual return of 7% before fees. The first investor is charged an all-in fee of 2%, while the second investor finds an advisor with a 1% fee.

After 30 years, here’s the stark difference:

• Investor A (2% fee) will end up with roughly $2 million.
• Investor B (1% fee) will have around $3.5 million.

That’s right—an extra 1% fee can reduce your nest egg by over $1.5 million. Fees may seem small initially, but they’re quietly working against your future.

Many clients would gladly choose lower fees if they knew about them. Yet, traditional financial advisors often benefit from the opacity of their fee structures. Fees for brokerage, custodial services, and fund management are often presented as unavoidable costs, and clients aren’t always fully aware of how they affect long-term outcomes.

Demand for transparency is rising, however. As more clients look to understand where their money is going, advisors who offer simple, clear pricing are gaining traction. Transparency isn’t just ethical—it’s necessary for clients to make informed choices and trust that they’re truly receiving value.

Absolutely. Many advisors and firms now offer alternatives that allow you to retain more of your wealth without sacrificing quality. Here are some fee structures worth considering:

1. Fee-Only Models: Fee-only advisors charge a single fee for their services, often based on time or a flat annual fee. This structure eliminates the need to charge based on assets, meaning you pay only for the service you receive.
2. Flat Fees: Some firms provide services for a flat rate that covers all costs, including fund and custodial fees. This can be a highly predictable, client-friendly model that ensures you know exactly what you’re paying.
3. Hourly Rates: For clients with specific, limited needs, an hourly rate can be a great solution. You pay only for the time you use, which can make sense for clients who don’t require constant management.

These structures align with a more client-centered approach, where the advisor is rewarded for their advice and service quality, not simply the amount of your assets.

Consider two clients, Lisa and Sam, who each have $750,000 in assets. Lisa works with a traditional advisor charging a 1% AUM fee, plus platform and fund fees that add up to a 2% total cost. Sam, on the other hand, works with a fee-only advisor at a flat rate of $6,000 per year.

1. Lisa’s Costs: At 2%, Lisa pays $15,000 annually.
2. Sam’s Costs: With a flat fee, Sam’s total is only $6,000 per year.

Over a 20-year period, Lisa pays $300,000 in fees, while Sam pays only $120,000. Additionally, Sam’s wealth compounds more quickly since less money is siphoned off in fees. Transparent, lower-fee models like Sam’s can make a substantial difference in outcomes.

At Intrepid Financial Services, we believe financial advice should be accessible, transparent, and fair. Our commitment to lower fees and straightforward pricing is part of our philosophy of keeping the focus on the client. We offer flat rates and clear terms so you can keep more of what you’ve worked hard to earn.

By embracing technology and cutting unnecessary costs, we deliver modern, high-quality service without bloating your fees. Our clients receive the same top-tier advice without the sticker shock, allowing you to build wealth without being dragged down by hidden expenses.

The traditional high-fee model of financial advising is outdated and costly, cutting into clients’ returns and slowing down wealth accumulation. In a world with accessible technology, transparent models, and the availability of fee-only advisors, it’s clear that clients deserve a better deal.

Choosing a low-cost advisor doesn’t mean compromising on service; it’s about keeping your interests at the forefront. At Intrepid Financial Services, we believe in offering clients fair, transparent pricing so you can enjoy the full benefit of your financial growth. If you’re ready to take control of your finances and keep more of your wealth, look for an advisor who values transparency as much as you do. The future of financial advice is client-centered—and affordable.