Negotiating financial advisor fees can help you avoid overpaying for the services you receive. But many people don’t realize they may have that leverage — or don’t know how to go about getting a better deal.
“Most people are afraid to negotiate fees because they don’t actually understand what they’re paying for. And when you don’t understand the value, you either overpay quietly or feel uncomfortable questioning it,” says Gabriel Shahin, a certified financial planner and the founder of Falcon Wealth Planning. “Money conversations feel confrontational, especially when there’s already trust built with the advisor.”
🤓Nerdy Tip
Many financial advisors have three sets of fees: a fee that is a percentage of your assets under management (an “AUM fee”), a flat fee for things like written financial plans and an hourly rate for help with special projects, such as a big transaction or a divorce. You don’t always pay all three of these fees. For a full overview, read our full article on how much financial advisors typically cost.
When to negotiate financial advisor fees
You can see what a financial advisor charges by looking at Part 2 of their Form ADV, which is a disclosure document that registered investment advisors must file at least once a year with the Securities and Exchange Commission. The SEC requires advisors to state in that document whether their fees are negotiable.
Before choosing a financial advisor, you’ll want to meet with several in order to get a sense of what you need from an advisor and what the costs will be. Ideally, you should negotiate fees when you’re reviewing their proposals and having those first few interactions with them. Reviewing their ADVs ahead of time can be a good way to understand what is and isn’t negotiable going into these conversations. And even if there’s no mention of fee negotiability in an advisor’s ADV, that missing information can be a good way to bring up the topic.
“The best time to have that conversation is upfront — before you agree to anything … That’s when you still have clarity and leverage,” Shahin says.
The worst time to negotiate financial advisor fees is after you’ve already started investing with the advisor or committed to certain services. “At that point, the costs are typically built in,” he adds.
3 ways to negotiate financial advisor fees
If you’re uncomfortable negotiating fees with an advisor, these three tactics might help.
Tactic 1: Get super clear about what you’re paying for
Ask: “What exact services do I get for this fee?”
What you’re listening for here is whether the advisor is responding with a list of services that are worthwhile and important to you. If the advisor is describing services that you’re not interested in or don’t need (or don’t need right now), say so and ask if the advisor will adjust the fees to match the service level you do need. Also ask whether the advisor has a minimum annual or quarterly fee (many do); this may also be negotiable.
Tactic 2: Discuss how they get paid
Ask: “Does your pay change based on the recommendations you make or on the decisions I make?”
What you’re listening for here are indications that the advisor is receiving commissions, bonuses or perks for steering you toward or away from certain investments or services. Use that information to negotiate a better deal by asking if lower-cost options will reduce your fees. Also consider whether you want to use an advisor who’s getting these payments in the first place. It is generally recommended to work with a licensed, registered fiduciary — preferably one who is fee-only, which means the advisor is paid directly by you and not through commissions for selling certain products. This is because commissions can introduce conflicts of interest — if an advisor is paid more to recommend certain products or services, you can’t be sure they’re not prioritizing that higher commission over your best interest.
Tactic 3: Compare them to another service channel
Ask: “What are you giving me that I can’t get from a robo-advisor or from AI?”
Robo-advisors are algorithm-driven, automated portfolio management services that typically charge very low fees. Though they usually provide very limited services, they can be a benchmark against which you can evaluate what the advisor is asking you to pay. You’re not necessarily threatening to walk here, you’re just focusing the conversation on outcomes. Asking the advisor to justify the price difference can score you fee adjustments or more services for the same price.
What not to do
The idea behind negotiating advisor fees is to understand and feel good about what you’re paying for, not get the price as low as possible. “What people should avoid is coming in with something like, ‘Can you lower your fee?’” Shahin says. “That turns the relationship into a transaction instead of a professional service.”
“A good advisor shouldn’t be the cheapest option—they should be the most valuable,” he says.
