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How Do Financial Advisors Get Paid? Thumbnail

How Do Financial Advisors Get Paid?

For some, it may be difficult to understand how money works, how financial advisors make their money and, more importantly, how you’re going to get your money’s worth. That’s why we’re going to make it as clear and concise as possible, so that you can understand exactly what to expect from potential financial advisors. 

Please make note that any fees should be clearly stated and displayed on your statements. Additionally, the fee schedule of your financial advisor should be ultra transparent, without trading fees or hidden fees, so that you have as much clarity as possible. You can also expect to pay a feasible fee if your advisor is in alignment with industry averages. With that being said, financial advisors are paid in one of the following ways:


A financial advisor commission structure  involves you paying the advisor a portion of the money you want them to manage. For example, if you have $200,000 to invest and your advisor presents an investment option that requires a 10% commission, then you’d pay $20,000 to the advisor up front and invest $180,000. It is also very likely that a commission-only financial advisor will earn commissions based on the performance of your investment. To be sure, it is wise to ask a prospective advisor if he or she operates in that capacity. 

In general, we find that commission-only advisors build a suboptimal outcome for clients. Because the advisor is only compensated when an action is taken, this incentivizes the advisor to have additional activity, even if the investments are already properly situated. This relationship also creates confusion for the client as they wonder whether the recommendation is being made to generate income for the advisor or grow the client’s account.

We do not charge or accept any commissions at Delta Wealth. We pass along all eligible commissions to our clients.


When an advisor charges a fee, it results in an hourly, flat, or retainer fee. The fees you pay are based on the level of expertise the advisor brings to your investments. It’s also important to remember that these types of advisors are either self-employed or employed with a registered investment firm, not representing a big Wall Street bank.

The financial advisor cost per hour includes the time that you spend with your advisor as you both assess your financial situation. The fee is not taken out of the money you invest, and allows you to gain specific knowledge about the benefits, risks, and other information regarding your finances. According to industry standards, the average hourly fee usually lands between $250-$500. 

Flat fees allow you to pay for a specific bundle of services that best accommodate your needs. Please note that the flat fee, like the hourly fee, is not taken from the amount of your investment. Additionally, keep in mind that if you want to ensure that you are not being taken advantage of in your search for the right investment advisor, the industry rate for financial planning ranges between $7,000-12,000. Investment advisory fees are more expensive, ranging from $1,000-2,000,000. 

Lastly, a retainer fee has similar characteristics to that of a flat fee pay schedule. The retainer includes a lump sum payment, usually broken into segments. For example, your financial advisor may assess a $3000 retainer for a bundle of services, which is broken down into 20 hours of work. Any tracked time over 20 hours, will result in an additional fee. However, if the advisor finishes a request in 10 hours, you are likely to receive a refund for unused hours. Standard retainers fall between $6,000 and $11,000.

Our different and better structure

Take a step back and reconsider what is the purpose of a financial advisor. For most families, it comes to a question of “Am I going to be ok?” This extends beyond stocks and bonds into spending decisions, Medicare plans, private real estate and taxes.

In order to answer that question “Am I going to be ok?,” Delta Wealth works and bills on a net worth basis. This extends our job into all aspects of your financial and planning life.

We strongly believe that framing our fee schedule around net worth proves most successful for our clients. As a result, our fee schedule follows a flat rate, either by a percentage of your net worth or by a fixed dollar amount. For example, a person with a net worth of one million dollars or less will only pay $1,250 per quarter, whereas a person with $10,000,000 net worth will pay 0.25% fee on each marginal dollar. In this way, you will know exactly how much you will be assessed, which gives you more time to focus on being taken care of. 

Delta Wealth Advisors cares about your financial outlook!

Again, we know that financial planning and investments can be confusing sometimes, but that’s why we’re here. We can clear up the ambiguity and provide the reassurance of knowing what you’re getting into. Delta Wealth Advisors is one of the most versatile accounting firms in Indianapolis. We offer a full suite of accounting, tax, and consulting services to meet your financial needs and goals. Contact us today to get a jumpstart on your financial health and wealth!