If you’re searching for financial advice, the best place to start is with an investment advisory firm. Managing money, planning for retirement, and growing wealth isn’t simple. Without the right strategy, you could be leaving money on the table or making costly mistakes.
A team of investment advisors helps you make smarter financial decisions, manage risk, and build a plan that actually works for your goals. Let’s review what investment advisory services involve and whether paying an advisor is worth it.
What Is an Investment Advisor?
An investment advisor is a financial professional who helps individuals and businesses manage their investments and overall financial strategy. Their main role is to provide expert guidance on where, when, and how to invest based on financial goals, risk tolerance, and long-term plans.
Unlike stockbrokers, who focus on executing trades, investment advisors take a more comprehensive approach. They analyze your full financial picture, create a strategy, and actively manage your portfolio to help you build and preserve wealth.
What Does an Investment Advisor Do?
An experienced investment advisor can:
- Develop a personalized investment plan based on short- and long-term goals
- Help diversify your portfolio to reduce risk and improve returns
- Provide ongoing market insights and adjust strategies as needed
- Guide you on retirement planning, tax strategies, and wealth preservation
- Act in your best interest if they are a fiduciary advisor
Some investment advisors operate independently, while others are part of registered investment advisory (RIA) firms. Their fees may be structured as a percentage of assets under management (AUM), a flat fee, or an hourly rate.
Is It Worth Paying an Investment Advisor?
Hiring an investment advisor is an added expense, so the big question is: Does the value they provide justify the cost? The short answer: it depends on your financial situation, investment knowledge, and long-term goals. But for many investors, the benefits far outweigh the costs.
1. Expertise and Professional Guidance
Investing isn’t just about picking stocks. It requires strategic planning, risk management, and tax efficiency to maximize returns. A team of highly experienced investment advisors brings in-depth market knowledge and proven strategies, helping you avoid common mistakes like emotional investing, improper asset allocation, or missing out on tax-saving opportunities.
2. Personalized Investment Strategies
Unlike robo-advisors or generic investment guides, a good investment advisor customizes strategies based on your personal financial situation. They take into account:
- Your risk tolerance
- Short- and long-term financial goals
- Tax implications
- Market conditions and economic trends
Instead of a one-size-fits-all approach, advisors create tailored strategies that evolve with you over time.
3. Time-Saving and Stress Reduction
Managing investments requires ongoing research, tracking market trends, and rebalancing portfolios. If you don’t have the time or expertise to do this yourself, hiring an investment advisor allows you to focus on what matters most—your career, business, or personal life—without stressing over market fluctuations.
4. Fiduciary Responsibility and Accountability
Fiduciary investment advisors are legally required to act in your best interest, meaning their advice is aligned with your financial goals, not driven by commissions or sales quotas. This level of transparency and accountability provides peace of mind that your investments are managed ethically.
Can You DIY Your Investments Instead?
Some investors successfully manage their own portfolios using index funds, ETFs, and basic investment principles. But without a deep understanding of market trends, risk management, and tax strategies, self-managed investing can lead to costly mistakes. A dedicated team of advisors can help you optimize your investments for maximum returns and tax efficiency, ensuring you get the most out of your portfolio.
How Much Is an Investment Advisory Service Fee?
Investment advisory fees vary based on the advisor’s pricing model, the level of service, and the complexity of your financial needs.
Percentage of AUM
The most common fee structure is a percentage of assets under management (AUM), typically 1% per year for portfolios under $1 million, with lower rates for higher asset levels. For example, if you have a $500,000 portfolio, a 1% fee would cost you $5,000 per year.
Flat Fee or Fixed Retainer
Some advisors charge a flat annual or monthly fee, ranging from $2,000 to $10,000 per year, depending on their services. This model works well for those seeking financial planning without ongoing portfolio management. Others offer hourly consultations, typically costing $200 to $500 per hour, ideal for DIY investors who need occasional guidance.
Hourly Fee
Commission-based advisors earn money by selling financial products, such as mutual funds or annuities. While this may seem cost-effective upfront, it can create conflicts of interest if they prioritize higher-commission products over what’s best for you.
Which Fee Structure Is Best for You?
The right fee structure depends on your investment style and needs. If you want full portfolio management, an AUM-based fee is standard. If you prefer financial planning without investment management, a flat fee or hourly rate may be more cost-effective.
Are Investment Advisory Fees Negotiable?
Yes, but it depends on the advisor, their firm’s policies, and your portfolio size. Large firms tend to have fixed fees, while independent advisors may offer flexibility, especially for high-net-worth clients.
If you have over $1 million in assets, advisors may lower their AUM fee. Many use a tiered system, charging 1% on the first $1 million and 0.50% on additional assets. Flat fees and hourly rates may also be negotiable, particularly if you only need specific services.
To negotiate, ask for a fee breakdown and compare rates. If an advisor won’t lower costs, they may offer extra services at no charge, like tax or estate planning. Always discuss fees upfront to ensure you’re getting value for your money.
Why Hire a Team of CPA Investment Advisors
At Griffiths, Dreher & Evans, PS, CPAs, we bring both investments and tax strategies to help you build and protect your wealth more effectively. All our shareholders are Certified Public Accountants (CPAs) with the Personal Financial Specialist (PFS) credential, a designation issued by the American Institute of Certified Public Accountants (AICPA).
For the past five years, Accounting Today has ranked us among the Top 150 CPA firms in the U.S.* because of our commitment to delivering results. When you work with us, you get:
- Fiduciary investment advice that puts your best interests first
- Tax-efficient investment strategies to keep more of what you earn
- A comprehensive financial approach, from portfolio management to estate planning
If you’re looking for smarter investing with built-in tax efficiency, our team is ready to help. Schedule a No-Cost, No-Obligation discovery meeting today.
*Annual ranking of CPA firms by assets under management by AccountingToday.com in 2020, 2021, 2022, 2023, 2024. Data is provided by AuditAnalytics.com. This ranking is not an indication or guarantee of the future performance of GDE; and a client’s actual experience with GDE may not be the same as the Accountingtoday.com ranking of GDE.