How Much Does a Financial Advisor Earn in the USA
What are the average recurring fees charged by financial advisors in the United States for the services provided to their clients? According to the 2017 edition of the annual study edited by AdvisoryHQ, it ranges from a maximum of 1.45% applied to assets not exceeding 50 thousand dollars, up to 0.25% in the case of assets between 4 and 5 million dollars. dollars, as even lower levels are negotiable for assets above this threshold.
Financial advisors and wealth management firms tend to present their clients with a table that makes transparent the structure of fees that will be applied for their services.
The commissions applied can be summarized: a percentage commission parameterized to the assets under management (the most commonly applied type), a fixed commission calculated on the basis of the assets under management, commissions on an hourly basis, annual commissions, hybrid commissions.
To these commissions are added administrative costs and overall management costs related to due diligence, monitoring, scale management, portfolio rebalancing, investment advice and financial planning.
Depending on the type of financial instrument that an investor inserts in his or her portfolio under advisory, there are then other commissions to be paid equal on average, for actively managed funds, to 0.65% per annum of the value of the fund if of a bond or 0.89% if of an equity nature.
In the case of index funds, commissions drop to 0.12% per annum on average in the case of equity funds and to 0.11% in the case of bond funds; finally, in the case of ETFs (not levied), annual commissions equal to 0.5% of the assets are applied on average, regardless of the nature of the ETF.
Three types of financial consultancy firms operate on the US market: “fee only” companies, which do not accept commissions or rebates for financial products and receive remuneration only from their customers; commission-based companies, which receive commissions on financial products sold to their customers; “fee-based” companies, which apply a “fee only” structure for some services and receive commissions on the products placed.
