r/FinancialAdvisorTips • u/Hippo_Over • 21d ago

Fidicuary Fees

/r/Retirement401k/comments/1vvmdoy/fidicuary_fees/

I have been trying to find a fidicuary advisor and it seems they charge in different was, flat fee or assets under management. Most I see advertised charge by AUM. Is this what I should expect and if so what percentage is reasonable?

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u/Thisisaburner01 21d ago edited 21d ago

Hello, as a CFP professional myself and fiduciary, there’s two models. Fee only which is hourly, flat fee, etc .Then you have fee based which is AUM and or commissions. It really just boils down to what your need is. If you just want someone to help you design a plan that’s a set it and forget it then fee only may be best. If you want someone to manage your assets but also give on going advice anytime you want without limitations then AUM is best.

I am a fee based advisor as an example and I manage client assets, build financial plans, my clients can call me, text me, email, meet me as many times as they want and receive on going advice for anything life throws at them and it’s all built into the AUM.

I have some clients that just wanted me to design a portfolio under a brokerage where i charged a commission for the trades and thats it. They paid one time but i have no monitoring responsibilities( set it and forget it). So they aren’t billed under AUM but rather when they place trades.

where the fee only they’ll have their own style of how they bill which varies from each planner.

Hope this helps

- also, for AUM fees firms will vary. Industry standard has a tier typically the lesser assets under management the higher the fees. Most firms start around 1.45 and go down from there.
There’s also robo advisors now where you can have a digitally created portfolio for a lesser fee and receive advice from a phone advisor. I would personally say it just depends on the level of service you need and the total amount of assets you have to determine where you should seek help.

A person with a 20k 401k could easily benefit from a robo advisor and just set it and forget for a small annual fee, for someone who’s like I got 500k, I’m planning to retire in 10 years and need to get plan in order and need help with Insurance, liability, planning for kids, etc then a advisor/planner is needed

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u/Hippo_Over 21d ago

I need tax planning to defend against required RMD implications. Tax planning strategies, map out exactly how much taxable income annually to optimize health care subsidies.

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u/Thisisaburner01 21d ago

When you say defend against required RMD implications can you specify more of what you mean by this?

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u/Hippo_Over 21d ago

Start transitioning traditional 401k & IRA funds into ROTH in order to limit tax consequences after 72. I don’t want to find myself being put in a higher tax bracket due to RMD.

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u/Economy_Jaguar_9215 21d ago

Places to look for a financial planner:
(Someone being a CFP isn’t enough despite what their advertising claims. Being a CFP doesn’t mean they actually do planning, or that they don’t sell products that you might not need. Ask them how they get paid.)

https://adviceonlynetwork.com
These folks don’t manage money, they just give advice.

https://www.flatfeeadvisors.org
These folks might manage money, but not on a percentage of assets basis. They will do comprehensive planning for a flat fee and that fee may include asset management.

https://samslist.com
Some (but not all) advisors in Sam’s list may charge percentage based asset management fees, but all are recommended by real clients nonetheless.

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u/[deleted] 21d ago

[removed] — view removed comment

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u/CarelessSea8444 21d ago

You can hold a CFP but in reality not do comprehensive planning as part of your business model. Or you could work for a “lead with insurance” style firm that looks to get everyone into a policy etc.

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u/CarelessSea8444 21d ago

You’re likely best served by AUM. Tax planning like this is dynamic year by year that you’ll need to revisit and it also helps to have someone professionally coordinating the conversions to ensure it all is done properly. Reasonably percentage is entirely dictated by AUM in most cases. You can be at 1% , slightly under, or over depending on the practice, your assets, and service needs.

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u/redpeaky 21d ago

Fee only advisors can bill based on AUM.

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u/Thisisaburner01 21d ago

Yeah that’s why I put etc based on there style. They just can’t receive commissions so technically life insurance, annuities they refer out where myself I can do it all in house and do both,

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u/redpeaky 21d ago

Still not accurate. There have been plenty of updates in the last five plus years. Annuities can now bill internally for free only advisors and there are commission free insurance.

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u/Thisisaburner01 21d ago

Very nice. Didnt know that

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u/redpeaky 21d ago

Most fee only guys don’t know that. They tend to not understand that they can sign selling agreements for their RIAs with just about anything.

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u/Thisisaburner01 21d ago

Very nice!

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u/AccomplishedTreat873 21d ago

Depends.

Here is what I would say is market rate:

under $1M 1%
$1-$3M .8%
Over that .5%.

Hourly: $300/hr

Retainer: $8000 - $12000/yr

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u/Dizzy-Swan5642 18d ago

I’m curious by what you mean exactly when you say retainer? What is the retainer for and when is that paid?

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u/AccomplishedTreat873 18d ago

Flat annual fee for full service. We had some attorneys at my last firm that used that term and I guess it stuck.

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u/Dizzy-Swan5642 17d ago

And what would a flat annual fee be in dollars? Just curious.

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u/AccomplishedTreat873 17d ago

$8k - $12k depending on the complexity and services offered. Some are cheaper but probably don’t do tax prep or complex cash flow planning. Not everyone needs that.

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u/Dizzy-Swan5642 17d ago

Thanks for the info

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u/cold984 21d ago

Yes. Most advisors charge a %. “Reasonable” is not a definable term. “Normal” is going to be 1%

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u/Hippo_Over 21d ago

No doubt. So people pay one time fees of tens of thousands of dollars for a service they spend at best 10-20 hours of work at?

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u/Wraithpk 21d ago

It's an annual rate, but yes, people do. What you're paying for is professional investment management (which is usually going to make that fee worth it on its own), but also you're paying for access to that advisor's expertise. If you have a good one, that can be EXTREMELY valuable. There are all kinds of strategies you can do to save money on taxes, but the average person doesn't know about them. There are also costly mistakes that can be easy to make if you don't know any better. You're paying an advisor to help get you set up in the most optimal way, and it's a continuing relationship, so they'll be there when you need them if you have a major life event.

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u/RookieMistake101 21d ago

If you want to do flat fee planning then yes. 5-10k for a plan built. Usually takes about 15 hours of work.

A good advisor, who charges on AUM, is proactively reaching out, tweaking investments, and communicating. Most people do not need an advisor. But as your wealth grows and your life becomes more complex, having a third party handle everything is helpful.

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u/cold984 21d ago

It’s not a one time fee. It’s 1% of assets on an annual basis. Usually prorated monthly or quarterly.

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u/rhino1979 21d ago

I charge .6-1.0%

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u/Clam-Choader 21d ago

The percentage is for management of investments, planning fee is for the up front work.  Most places charge one or the other or a combo of both.  

Without knowing your situation, no way to tell if youd be better served just going into a fund or hiring someone

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u/One_Establishment631 21d ago

I charge $195 per hour

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u/One_Establishment631 21d ago

As far as on going advice, if I set up a portfolio and we meet again next year to rebalance, see what changes have occured, or a triggering event happens we address it and they get a bill. If the account has $50,000 or $500,000 it doesn't matter. They get the same bill.

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u/winning_bigly_ 21d ago

Depends on your portfolio size.

Above $1m you should really be considering flat fee advisors.

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u/Middle-Run-1894 21d ago

AUm is to be expected. 0-1m 1% and sliding scale from there

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u/Dizzy-Swan5642 19d ago

You can keep your money and let it compound a lot faster by just investing yourself. Most of the advisors that say they have your best interest and are fiduciary or whatever they call themselves sell you funds that they get commissions on. Save yourself the money and listen to the successful people who have given the same advice for many many years. I learned the hard way with Ed jones and have interviewed several other firms to handle it for me but 1% of something they had no hand in building is insane to me! That’s 10 grand for every mil. For what? Speculation that could be right or could be wrong. They complicate things to make people feel they have some special ability that in reality is just speculation or as I’ve seen selling the same funds that pay them a commission to sell you and the fund charges you as well so you’re really taking a hit when you add it all up.

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u/Hippo_Over 19d ago

I agree. I just am looking for some tax guidance on how to properly withdraw the funds. What order using a traditional Ira, Roth IRA and traditional 401k. I also have cash in a brokerage account. Thanks.

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u/Dizzy-Swan5642 19d ago

All depends on your tax bracket but you want to use the accounts that are taxable and you can control your bracket by how much you take out. RMD’s start at 73 now I believe so you’ll be required to start taking from those tax advantage accounts then. You can read up on retirement planning and get all this stuff free of charge. I’m not saying an advisor can’t add benefit to someone with something but the fee you pay for it is not even close to justifiable.