The Hidden Truth About Financial Advisor Fees (That No One Talks About)
- Jonathan Harner, CFP®
- May 8
- 3 min read
Have you ever wondered why some financial advisors seem nervous when you ask about their fees? I'll tell you exactly why – and it might surprise you.
Here's the Uncomfortable Truth: Many advisors don't actually believe they are worth their fees. That's why they:
Hide their pricing deep on their website (if they give any pricing guidance at all).
Dodge the question when you ask.
Charge rock-bottom rates to compete.
We take a different approach. Not only are we comfortable discussing my fees – we are proud of what we charge. Here's why...
The "$900 vs. $45,000" question that changes everything
Ask yourself: Would you rather invest $300 and get $900 in return, or $15,000 and get $45,000 in return?
This isn't a trick question. This is the choice you face when deciding between a "budget" advisor and a real financial planner.
In both cases your percentage gain is the same. But in one case you are 50x’s wealthier!
I understand why many advisors are uncomfortable with their prices. The only means the financial services industry has given the public for evaluating advisors are price and performance.
Many advisors aren’t comfortable trying to beat the S&P 500, but still feel the need to do so. So, that leaves price as the primary differentiator between firms. By hiding their prices and dodging the question, the advisor is hoping the prospective client is too deep into the process to say no.
However, the fees I charge are in line with the value my clients receive.
This may sound like wild conjecture, but it is not.
Let’s use an example: pretend you are a client. You went through our process. You set up accounts and transferred your portfolio to us.
You are contributing $10,000 to your retirement accounts per year. You earn a conservative 7% return on average. Now let’s say we work together for 30 years. Over that time, I help you increase your retirement contributions by $1,000 each year. If you started with $10,000, in 30 years, you'll have about $1 million more than if we had not worked together and you had not increased your contributions.
Working with us, you have roughly $1.9 million as opposed to roughly $900,000 without us as your financial planner. This is life-changing amounts of money. It is the difference between a decent retirement and a worry-free one.
If I charge 1.5% on assets I manage, this one bit of advice would be worth about 3.5x’s my total fee over those 30 years. Advice like this is one very small part of what we do for clients.
Financial advisors fear showing their fees. They doubt they can deliver value in excess of their fees to their clients. I am confident that if we work together long enough, the value a client will receive will be far more than my fee.
Investing in a relationship with a real financial planner is one of the smartest money moves you will make.
Note: if an advisor ever tells you their services are “free”. They are probably the most expensive option out there. Here are some questions to ask…
Is there an M&E Charge?
What is the Expense Ratio for Investments?
Is there an Administrative Charge?
Is there are Income Rider Charge?
Is there a Death Benefit Rider Charge?
Are there other Rider Charges?
What is the management fee?
If, for example…
The M&E Charge is 0.25%
The Expense Ratio for Investments is 0.50%
The Administrative Charge 0.15%
The Income Rider Charge 0.75%
The Death Benefit Rider Charge 0.25%
Other Rider Charges n/a
And the management fee is 0.50%
Then the total fee is 2.40% (which is a lot more than “free”)
To Learn more about our services schedule your free consultation here:
P.S. If you're still wondering about fees, ask yourself this: In five years, will you be more concerned about what you paid, or what you gained? Let's talk about the value you deserve.
