What does a financial advisor really cost?
A 1% fee sounds small. It comes out of your whole balance every year, and every dollar of it stops growing. Change any number below.
I have invested and I’m . If an advisor charges a year until I retire at , and the market grows a year, I’d retire with
less than with the same money in an index fund on my own. I’d pay the advisor $1,471,692 in fees, and the other $3,070,381 is what those fees would have grown into.
- On your ownIn an index fund, at 65$17,449,402
- With the advisorAt 1% a year, at 65$12,907,329
Why 10%? The S&P 500 has returned about 10.5% a year over the last 100 years, with dividends reinvested and before inflation. Source
Growth and the fee are your assumptions, not a forecast. The fee comes out of the balance at the end of each year, after that year’s growth; most advisors take it a quarter at a time, which costs about the same. Both earn the market’s return before the fee, and a fund’s own small expense is left out of both. Dollars are the dollars of each year, not adjusted for inflation.
How the fee adds up
A percentage fee grows with your money. The more the market gives you, the more the advisor takes, every year until you stop paying it.
How is it worked out?
The same starting amount grows at the rate you choose twice: once on its own, once with an advisor who takes the fee you enter from the whole balance every year. The fee comes out at the end of each year, after that year’s growth. The difference at retirement is the figure.
Why 10% growth?
Over the last 100 years the S&P 500 has returned about 10.5% a year, with dividends reinvested and before inflation: Robert Shiller’s data, compounded from 1926 to 2026. Some decades did much better and some much worse. Try 7% for a cautious view, or to see the answer closer to today’s dollars. S&P 500 returns since 1926.
Why is the difference bigger than the fees?
Every dollar paid in fees leaves the account and stops growing. By retirement the portfolio is short both the fees themselves and everything they would have earned, and the second part is often larger than the first.
What is an assets-under-management fee?
A fee charged as a percentage of the money an advisor manages for you, every year, whether the market is up or down. It is usually billed a quarter at a time and taken straight from the account, so it rarely shows up as a bill you pay. Many advisors charge a lower percentage on larger accounts.
What does the SEC say about fees?
Its investor bulletin on fees works through $100,000 growing 4% a year for 20 years: with a 1% annual fee it ends near $179,000, nearly $30,000 less than with a 0.25% fee. The SEC’s bulletin on fees.
Can I deduct my advisor’s fee?
Not on a personal federal return. Investment advisory fees are a miscellaneous itemized deduction, which could not be taken from 2018 through 2025, and the 2025 tax law made that permanent from 2026.
Is an advisor ever worth it?
That depends on what you get for the fee: planning, taxes, an estate, keeping you invested through a crash. Some advisors charge a flat yearly fee or by the hour instead of a percentage. The calculator shows the price, so you can weigh it against what you get.
Checked on October 3, 2026 against S&P 500 returns since 1926, from Robert Shiller’s data, SEC, How Fees and Expenses Affect Your Investment Portfolio, 26 U.S.C. 67, miscellaneous itemized deductions, as amended in 2025 and Publication 529, Miscellaneous Deductions. An estimate for your records, not tax advice.
Where to put the money instead
Before any brokerage account, the accounts that cut your taxes come first: a 401(k) match, an HSA, a Roth IRA. The savings waterfall puts them in order for you.
More if you save or invest
- Tax-equivalent yield calculatorThe money market fund that pays you most after tax
- Savings waterfall calculatorWhich account your next dollar goes to, and how much
- 401(k) contribution limitsThis year’s limits, catch-ups and the total
- Roth IRA income limitsWhere a Roth IRA shrinks and stops, by filing status
- Backdoor RothOver the income line, step by step, and the mega backdoor
- 529 tax deduction by stateWhat 529 money takes off your state taxes
Put more back in your pocket.
Reimburse works out where your money goes furthest after tax, from the fund that pays you most to which account comes first, and keeps track of what earns money back.