What Does It Cost to Work With a Financial Advisor?

Ask advisers how they are being compensated. There may be a big difference between what they earn and what you pay them. I am not only referring to the fact that they may be getting referral fees for recommending you as a client. That would be a conflict of interest harmful to your interests.

I am calculating actual cost.

You will pay the advisor’s fee, on the management of your assets, It can be 1% to 3%, generally 1½%. But the asset-management fee may not be the only cost . You pay other charges, which include mutual fund and exchange-traded fund fees for management.

And if you use a hedge fund, you may also pay about 20% or so of fund earnings.

The problem is that these costs add up to a considerable chunk of your annual returns.