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 |