As published recently in their annual report by the financial blog, Kitces, pricing in finance is dominated by one model above all others: Assets Under Management (AUM). This is a fee structure that,
The article from MSN Money discusses the costs associated with hiring a financial advisor. It outlines that financial advisors typically charge in one of three ways: a percentage of assets under management (AUM), hourly rates, or flat fees. The percentage of AUM can range from 0.5% to 2% annually, with the average being around 1%. For example, managing a $100,000 portfolio at a 1% fee would cost $1,000 per year. Hourly rates might be anywhere from $100 to $400, depending on the advisor's experience and location. Flat fees can vary widely, from a few hundred dollars for a one-time financial plan to several thousand for comprehensive, ongoing services. Additionally, the article mentions other potential costs like commissions on products sold, performance-based fees, or even subscription models. It also emphasizes the importance of understanding all fees involved, as they can significantly impact investment returns over time, and suggests considering robo-advisors as a potentially cheaper alternative for basic investment management.
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