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More FAs Are Willing to Work with Clients on Hourly or Annual Fees

October 29, 2020

Some wealth management practices are turning from asset-based fees to other payment models in order to work with a broader group of clients, according to news reports.

With financial advisors traditionally charging around 1% of a client’s assets, investors with less than $250,000 or $500,000 in assets aren’t particularly appealing to them, CNBC writes.

Some advisors are turning to hourly or annual fees so that they can tap less wealthy, affluent clients, according to the news network.

“You don’t need to be rich to work with a financial planner,” said Justin Nichols, a Manhattan, Kan.-based certified financial planner and director of operations at the Garrett Planning Network. “Our advisors agree to work with a broad group of clients, not just the wealthy.”

Garrett’s more than 200 advisors offer clients the option of paying by the hour, with the fee ranging from $150 to more than $500, according to Nichols, CNBC writes. Some clients will need just a couple of hours of guidance while others will need 12, and Garrett’s model allows the client to focus on certain urgent areas of their financial situation, he says, according to the network.

Meanwhile, Eric Roberge, a CFP and founder of Beyond Your Hammock in Boston, charges clients $4,000 a year, split up into monthly payments of $333, he tells CNBC. That fee covers up to five meetings with a personal financial planner in the first year and two to three meetings in subsequent years, according to Roberge, the network writes.

Jason Howell Company in Vienna, Va., offers clients the option of paying a $5,000 fee for the first six months and a flat $5,000 fee annually thereafter, Jason Howell, a CFP and the president of the firm, tells CNBC.

Flow Financial Planning in Bellingham, Wash., charges a median fee of $6,000 annually, says Meg Bartelt, a CFP and the founder of the firm, according to the network. Her average client earns $140,000 annually, CNBC writes.

“If you can create a business that can profitably serve more people, you’ll find it easier to find clients,” Bartelt says, according to the network.

For clients who can’t afford such annual or hourly fees, Bartelt suggests reading books or attending group coaching sessions or courses, CNBC writes.

More than 80% of top-ranked advisors charge fees based on client assets, although that’s often combined with commissions or flat planning fees, according to data released in February by Ignites Research. Around 7% of the top-ranked advisors charge a flat fee only and 2% charge an hourly fee only, while 27% charge a flat fee and/or hourly fees in combination with another fee, according to Ignites Research.

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By Alex Padalka
  • To read the CNBC article cited in this story, click here.
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Tags:  Finding and winning new clients , Fees and compensation , Garrett Planning Network

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