The short answer: most financial advisors charge a percentage of the money they manage for you, and that percentage is usually around 1% a year. Envestnet’s 2026 fee study put the average bundled advisory fee at 0.96%, down from 1.05% in 2023. On a $500,000 portfolio, that is roughly $5,000 a year.
The longer answer is that the headline percentage is rarely the whole cost, and the whole cost is rarely disclosed in one place. Below is every common way advisors charge, what each one runs in practice, the costs that never show up on an invoice, and how to work out what you are actually paying right now.
Every figure below is sourced, and the studies and rules behind them are listed at the end of this article. Figures are the most recent available as of August 2026. We review this page annually.
The five ways advisors charge
1. A percentage of assets under management
This is the most common arrangement. You pay an annual percentage of the balance the advisor manages, usually billed quarterly and deducted directly from the account.
Around 1% is the industry shorthand, and it holds up reasonably well. Kitces research on advisory fee benchmarks (2024 data) found that for portfolios under $1 million, typical fees run between 1.00% and 1.20%, and that at a $1 million portfolio size, 62% of advisors charge at least 1%. Above $2 million the range drops to roughly 0.80% to 1.00%, and only 32% of advisors still charge 1% or more.
Two structures exist, and the difference matters more than most people realize:
- Graduated (or tiered). Each dollar is billed at the rate for its band. The first $250,000 might be billed at 1.25%, the next $250,000 at 1.00%, and so on. This is what most firms use.
- Whole-balance (sometimes called a cliff). Your entire balance is billed at the single rate for the band you land in. Cross a breakpoint and the whole balance reprices.
Neither is inherently better, but they produce different numbers, and a schedule that looks cheaper in one structure can be more expensive in the other. Ask which one you are on.
2. Hourly
Compiled industry data puts this at $200 to $400 an hour in 2026, up from the $120 to $300 range cited a few years ago. Useful when you have a specific question and do not want an ongoing relationship. Less useful when you do not know what you do not know, because you are paying to define the problem as well as solve it.
3. A flat fee for a plan
A one-time project fee for a written financial plan. Envestnet found the average flat planning fee reached $2,926 in 2026, up from $2,554 in 2023. Comprehensive plans commonly run $2,500 to $5,000. You get a document and a set of recommendations. Implementation is usually on you.
4. A retainer or subscription
An ongoing flat fee, billed annually or monthly, independent of your portfolio size. Envestnet’s survey of 491 advisors found the average annual retainer reached $6,815 in 2026, a 52% jump from $4,484 in 2023. Registered investment advisers averaged $7,550, against $5,237 at non-RIAs. Monthly subscription pricing rose over the same period from an average of $215 to $595.
This model has grown quickly, and it suits people with complex planning needs but modest investable assets, since the fee does not scale with the portfolio.
5. Commissions
The advisor is paid by the company whose product you buy rather than by you. Annuities, life insurance, and certain mutual fund share classes all pay distribution compensation.
The cost here is real but indirect, which is exactly what makes it hard to evaluate. You do not write a check, so it can feel free. It is not.
And for comparison: robo-advisors
Automated platforms generally charge 0.15% to 0.50%, per the same compiled data. They allocate and rebalance a portfolio. They do not know that your daughter is starting college in three years or that your employer just changed its vesting schedule.
What 1% actually costs, in dollars
Percentages are easy to wave away. Dollars are not. At the median 1% advisory fee:
| Portfolio | Advisory fee at 1% | Plus average fund costs | All-in per year |
|---|---|---|---|
| $250,000 | $2,500 | $800 | $3,300 |
| $500,000 | $5,000 | $1,600 | $6,600 |
| $1,000,000 | $10,000 | $3,200 | $13,200 |
| $2,000,000 | $20,000 | $6,400 | $26,400 |
The third column is the part most people miss, and it is the subject of the next section.
The costs that never appear on your invoice
Your advisory fee is disclosed. These are usually not, at least not anywhere you would think to look.
Fund expense ratios
Every mutual fund and ETF charges its own annual fee, taken out of the fund before returns are reported. You never see it as a line item.
Morningstar’s 2026 US Fund Fee Study found the asset-weighted average expense ratio across US funds was 0.32% for 2025. But that average is pulled down by enormous index funds. The equal-weighted average, which treats every fund the same, was 0.92%. Active US equity funds averaged 0.58%, while passive funds had fallen to roughly 0.10% as of 2024.
The practical consequence: two investors both paying “1%” to their advisor can be paying very different totals depending on what they are put in. On $1 million, the gap between a 0.10% portfolio and a 0.58% portfolio is $4,800 a year.
12b-1 fees
An annual marketing and distribution charge paid out of fund assets, some of which is routed back to the firm that sold you the fund. Under FINRA Rule 2341, the asset-based portion is capped at 0.75% a year, plus up to 0.25% in service fees.
Worth knowing: a fund can only describe itself as having no sales charge if these charges stay at or below 0.25% a year.
Sales loads
A commission taken off the top when you buy, or on the way out when you sell. The same FINRA rule caps combined front-end and deferred charges at 8.5% of the offering price for funds without asset-based charges, and 6.25% for those with them. A 5% front-end load means a $10,000 investment starts life at $9,500.
The smaller ones
- Redemption fees, which the SEC limits to 2%.
- Cash sweep spreads. Idle cash in your account earns a rate set by the custodian, which may be well below what the same cash could earn elsewhere. The difference is revenue for someone.
- Trading and platform costs, which vary by custodian.
Not sure what you are paying now? Bring us a recent statement and we will walk through it with you line by line, including the fund-level costs. Thirty minutes, no charge, no obligation.
What is the fee actually paying for?
This is the question worth asking, and it is asked far too rarely.
Most people assume an advisory fee buys investment management. Industry data says otherwise. Kitces found that advisory firms allocate, on average, 59% of the fee to investment management and 41% to financial planning and other services. At firms that bundle planning into a single fee, the split moves closer to even: 54% investment management, 46% planning.
So roughly half of what a typical advisory fee buys is not portfolio management at all. It is the tax planning, the equity compensation decisions, the retirement account consolidation, the Social Security timing, the estate coordination, and the dozens of small judgment calls that never show up in a performance report.
That reframing matters, because it changes the comparison. If you are only comparing an advisor to an index fund, you are comparing the 59% and ignoring the rest.
What that other 41% actually looks like
“Financial planning” is a vague phrase, and vague phrases are easy to charge for. It is worth being concrete about what it should mean.
At its weakest, planning is a bound document produced once and reviewed each year. At its strongest it is closer to planning on demand: someone you call when a financial decision turns up in your life, whether or not that decision has anything to do with your portfolio.
Some of what that has meant for our clients:
- A property tax bill, appealed. We noticed a client’s home was assessed well above comparable properties nearby. We pulled the comps, took the case to the county assessor, and made the argument on their behalf. The reassessment saves them roughly $4,000 a year, every year they own the house.
- A car, negotiated. A client told us which car they wanted. We found three local dealers who had it, put them in competition for the business, and negotiated the price ourselves. The client showed up, signed the paperwork, and drove home about $2,000 better off.
- A mortgage, pressure-tested. We have sat on calls with loan officers to compare what a client was actually being offered against what was available elsewhere.
- A retirement plan, corrected. A business owner was contributing through a SEP IRA. Moving to a Solo 401(k) let them shelter an additional $23,500 in 2025, income that would otherwise have been taxed at the top federal rate of 37% — worth $8,695 in federal tax that year alone. We added backdoor Roth conversions and coordinated directly with their CPA.
None of these were billed separately. None of them show up in a performance report. And none of them are portfolio management.
These are examples of the kind of help the fee covers, not typical or expected results. Every client’s circumstances are different, and we cannot promise any particular outcome.
The point is not that every advisor works this way. Many do not, and many are not structured to. The point is that if roughly half your fee is being allocated to “planning,” you are entitled to know what that word means at the firm charging you, and to ask for examples before you sign anything.
Fee-only, fee-based, and commission: not the same thing
These sound alike and are not.
- Fee-only. The advisor is paid only by you. No commissions, no product sales, no third-party compensation.
- Fee-based. Sounds nearly identical. Means the advisor charges a fee and can earn commissions. The word doing the work is “based.”
- Commission. Compensation comes entirely from products sold.
Related but separate is the standard of care. Registered investment advisers owe a fiduciary duty, a continuing obligation to act in your best interest. Broker-dealers operate under Regulation Best Interest, which requires recommendations to be in your best interest at the time they are made but is not the same continuing duty.
Neither structure makes someone good or bad at the job. But you should know which one you are dealing with, and you can find out in about two minutes.
How to find out what you are actually paying
- Read Form ADV Part 2A. Every registered investment adviser files one, and it discloses the fee schedule in plain language. It is public. Search the firm at adviserinfo.sec.gov.
- Read Form CRS. A two-page summary covering services, fees, conflicts, and disciplinary history. It is deliberately short.
- Look up the expense ratio of every fund you hold. Add them up, weighted by how much of your portfolio each represents. FINRA’s Fund Analyzer will do this for you.
- Ask one direct question: “What is my all-in annual cost, including fund expenses, and how are you compensated beyond the fee I pay you?” A straight answer is a good sign. A complicated one is also informative.
Is it worth it?
Sometimes, and not always. Worth saying plainly:
An advisor is probably not worth the cost if your situation is genuinely simple, you are disciplined enough to keep buying during a decline, and you have no meaningful tax or equity compensation complexity. A low-cost index fund and a rebalancing calendar will serve you well, and you should not pay 1% for someone to build you one.
The calculation changes when there is something to actually manage. Concentrated employer stock. A business. A liquidity event. Retirement income that has to start before 59½ and last thirty years. Aging parents whose finances are quietly becoming your problem. Or simply knowing that you sold in a panic once and might do it again.
It changes again depending on what the fee covers. If an advisory fee buys portfolio management and nothing else, then the honest comparison is against a low-cost index fund, and the index fund often wins. If it also buys someone who will appeal your property tax assessment, sit on the call with your loan officer, and catch the retirement plan quietly costing you eight thousand dollars a year in avoidable tax, the comparison is a different one — because the index fund does none of that.
So the honest test is not whether 1% sounds like a lot. It is whether the work being done for you is worth more than it costs. Here is one way to find out: ask any advisor you are considering to name three specific things they did for a client in the past year that had nothing to do with investment returns. The answer, or the absence of one, tells you most of what you need to know.
What we charge
Ours is published in full. Blue Haven Capital is a fee-only fiduciary, which means we are compensated only by our clients, we sell no products, and we earn no commissions. Our fee runs from 1.25% at the smallest balances down to 0.37%, billed on the whole balance rather than in tiers, with no account minimum. Financial planning is included rather than billed separately, and we generally build portfolios with fund expense ratios around 0.10%.
See the full fee schedule, which matches what is filed in our Form ADV Part 2A. If you would rather know who you would be working with first, you can read about both of our advisors or learn how the firm works.
Want a straight answer about your own situation? We will tell you what we would charge, what it would cover, and whether we think you need us at all. We would rather say no than take on a client we cannot help.
Sources
Every industry figure in this article comes from one of the following. Where a study reports a range and an average, we have said which is which.
- Envestnet, 2026 State of Financial Planning Fees (published 4 May 2026; survey of 491 advisors). Source for the 0.96% average bundled advisory fee, the $6,815 average retainer, the RIA and non-RIA retainer split, the $2,926 average flat planning fee, and the $595 average monthly subscription.
- Kitces, How Financial Advisors Actually Charge For Their Services (2024 data). Source for the fee ranges by portfolio size, the share of advisors charging at least 1%, and the 59% / 41% split between investment management and planning.
- Morningstar, 2026 US Fund Fee Study (data through 31 December 2025). Source for the 0.32% asset-weighted and 0.92% equal-weighted expense ratios, the 0.58% active US equity average, and the 0.10% passive average.
- FINRA Rule 2341. Source for the 0.75% asset-based sales charge cap, the 0.25% service fee cap, the 8.5% and 6.25% sales charge limits, and the condition for describing a fund as carrying no sales charge.
- SEC, Mutual Funds and ETFs: A Guide for Investors. Source for the 2% redemption fee limit and the descriptions of front-end and deferred sales loads.
- FINRA, Regulation Best Interest. Source for the broker-dealer standard of conduct.
- Harness, average fees for financial advisors (2026). A secondary compilation, used only for the hourly rate range and the robo-advisor range, which the primary studies above do not cover.
Blue Haven Capital’s own fee schedule is filed in our Form ADV Part 2A and published in full on our pricing page.
This article is for general educational purposes and is not investment, tax, or legal advice. Fee figures cited are industry averages from the sources linked above and will not match every firm. Blue Haven Capital’s own fees are disclosed in our Form ADV Part 2A.
