Advisor Fee Models
| Fee Model | Cost | How You Pay |
|---|
| Commission-based | 0%-front end | Embedded in products |
| AUM (% of assets) | 0.50-2.00%/year | Deducted from account |
| Fee-only (hourly) | $150-$400/hour | Direct invoice |
| Fee-only (flat) | $1,000-$5,000/year | Direct invoice |
| Fee-only (project) | $500-$3,000 | One-time payment |
| Robo-advisor | 0.25-0.70%/year | Deducted from account |
Commission-Based Advisors
How It Works
| Aspect | Details |
|---|
| Upfront cost to you | $0 |
| How they’re paid | Product commissions |
| Typical products | Mutual funds with trailers |
| Annual cost | 1.0-1.5% (trailer fees) |
True Cost Example
| Investment | Amount |
|---|
| Portfolio size | $200,000 |
| Avg mutual fund MER | 2.20% |
| Trailer to advisor | ~1.00% |
| Your annual cost | ~$4,400 |
| To advisor | ~$2,000 |
Pros and Cons
| Pros | Cons |
|---|
| No upfront fees | Conflict of interest |
| Accessible | Limited product selection |
| Hand-holding | Higher ongoing costs |
| May not be fiduciary |
AUM (Assets Under Management)
Typical AUM Fees
| Portfolio Size | Fee Range |
|---|
| Under $250K | 1.25-1.75% |
| $250K-$500K | 1.00-1.50% |
| $500K-$1M | 0.85-1.25% |
| $1M-$2M | 0.75-1.00% |
| Over $2M | 0.50-0.75% |
Annual Cost Example
| Portfolio | AUM Fee | Annual Cost |
|---|
| $100,000 | 1.50% | $1,500 |
| $250,000 | 1.25% | $3,125 |
| $500,000 | 1.00% | $5,000 |
| $1,000,000 | 0.85% | $8,500 |
| $2,000,000 | 0.70% | $14,000 |
What AUM Includes
| Service | Typically Included |
|---|
| Portfolio management | ✅ |
| Rebalancing | ✅ |
| Financial planning | Often |
| Tax planning | Sometimes |
| Estate planning | Sometimes |
| Insurance advice | Varies |
Fee-Only Advisors
Hourly Rates
| Advisor Type | Hourly Rate |
|---|
| Junior planner | $150-$200 |
| Experienced CFP | $200-$350 |
| Specialist | $300-$500 |
Flat Fee/Retainer
| Service Level | Annual Fee |
|---|
| Basic plan | $1,000-$2,000 |
| Comprehensive | $2,000-$4,000 |
| Complex/HNW | $4,000-$10,000+ |
Project-Based Fees
| Project | Typical Cost |
|---|
| Financial plan only | $1,500-$3,500 |
| Retirement projection | $500-$1,500 |
| Investment review | $500-$1,000 |
| Tax planning session | $300-$800 |
| Estate plan review | $500-$1,500 |
Why Fee-Only
| Benefit | Details |
|---|
| No conflict of interest | Not paid by products |
| Fiduciary duty | Must act in your interest |
| Product agnostic | Can recommend anything |
| Transparent | Know exactly what you pay |
Robo-Advisors
Robo-Advisor Fees
| Provider | Management Fee | Total Cost (with ETFs) |
|---|
| Wealthsimple | 0.40-0.50% | 0.60-0.70% |
| Questwealth | 0.25% | 0.40-0.50% |
| CI Direct | 0.35-0.60% | 0.50-0.75% |
| RBC InvestEase | 0.50% | 0.65-0.75% |
| BMO SmartFolio | 0.40-0.70% | 0.60-0.90% |
Annual Cost Comparison
| Portfolio | Robo (0.50%) | AUM (1.25%) | Mutual Fund (2.20%) |
|---|
| $100,000 | $500 | $1,250 | $2,200 |
| $250,000 | $1,250 | $3,125 | $5,500 |
| $500,000 | $2,500 | $6,250 | $11,000 |
Cost Comparison Over Time
$500,000 Portfolio Over 20 Years
Assuming 7% gross return, fees deducted
| Option | Annual Fee | Value After 20 Years |
|---|
| DIY (0.20%) | $1,000 | $1,790,000 |
| Robo (0.50%) | $2,500 | $1,680,000 |
| Fee-only (0.75%) | $3,750 | $1,600,000 |
| AUM (1.25%) | $6,250 | $1,450,000 |
| Commission (2.00%) | $10,000 | $1,240,000 |
Difference: $550,000 between lowest and highest cost options.
Finding Fee-Only Advisors
Where to Look
| Resource | Details |
|---|
| FPAC | Fee-only planners association |
| Advice-Only Advisors | Directory |
| PWL Capital | Fee-only firm |
| Money Coaches Canada | Financial coaching |
Questions to Ask
| Question | Why It Matters |
|---|
| How are you compensated? | Understand true cost |
| Are you a fiduciary? | Legal duty to you |
| What credentials? | CFP, CFA, CIM |
| What’s included? | Services for the fee |
| Can I see sample plan? | Quality check |
When You Need an Advisor
Worth the Cost
| Situation | Value of Advice |
|---|
| Approaching retirement | High |
| Complex tax situation | High |
| Business owner | High |
| Inheritance received | High |
| Divorce | High |
| First-time investor | Medium |
| Major life change | Medium |
DIY May Be Better
| Situation | DIY OK |
|---|
| Simple situation | ✅ |
| Index investor | ✅ |
| Time to learn | ✅ |
| Low asset base | ✅ |
| No complexity | ✅ |
Advisor Value-Add
Where Advisors Earn Their Fee
| Service | Potential Value |
|---|
| Behavioral coaching | Prevent panic selling |
| Tax optimization | 0.5-1.5% |
| Asset location | 0.2-0.5% |
| Rebalancing | 0.2-0.5% |
| Retirement income | Maximize benefits |
| Estate efficiency | Reduce taxes |
Research on Advisor Value
| Study | Finding |
|---|
| Vanguard | ~3% “advisor alpha” |
| Morningstar | 1.6% gamma |
Value comes from planning, not just investing.
My Recommendation
Best Approach by Situation
| Situation | Recommendation |
|---|
| Simple, learning | Robo-advisor |
| Simple, experienced | DIY + occasional fee-only |
| Complex, time-poor | Fee-only advisor |
| High net worth | AUM or fee-only |
| Needs hand-holding | AUM advisor |