A financial advisor's fee typically covers a range of services designed to help you manage and grow your wealth. Advisors can charge individually for these services or bundle them together. The specific services included vary depending on the advisor and their fee structure. A financial advisor's fee may include the following services.

Most advisors start by reviewing your current finances, including income, expenses, assets, and liabilities. They'll also help you define your goals, such as retirement, education funding, or charitable giving.

A financial plan looks at your finances as a whole, including investments, taxes, estate planning, and giving. It should reflect your situation, goals, and comfort with risk. Planning may also cover cash flow, making sure you have money available when you need it, and preparing for major events like selling a business.

Investment management means building and maintaining a portfolio that fits your goals, time horizon, and tolerance for risk. Advisors typically diversify across asset classes to help manage risk, although diversification can't eliminate it or guarantee returns.

Some advisors also offer access to alternative investments, such as private equity, private credit, hedge funds, or real estate. These can carry higher fees, less liquidity, and more complexity than public investments, and are often limited to investors who meet certain wealth or income thresholds. If these investments interest you, ask about your advisor's experience and process for evaluating them.

Retirement planning can include deciding how much to save and which accounts to use, such as IRAs and 401(k)s. As retirement gets closer, an advisor can help you plan withdrawals, decide when to claim Social Security, and understand Required Minimum Distributions (RMDs). Under current law, RMDs generally begin at age 73 for most people.

An advisor may help you use tax-efficient investment strategies and coordinate with your CPA or tax preparer. This can include managing capital gains, timing income, and planning around complex situations.

Advisors can work with your estate planning attorney to help make sure your investments, beneficiary designations, and account titling support your estate plan. Your attorney drafts documents like wills and trusts. Your advisor helps make sure your financial plan and those documents work together.

If you own a business, an advisor can also help you plan for succession and coordinate with your other professional advisors.

For families saving for education, an advisor can help set up and manage 529 plans or other education savings accounts and plan how to pay for future costs.

If giving is important to you, an advisor can help you build a charitable plan that reflects your values and may offer tax benefits. This could involve donor-advised funds, gifts of appreciated assets, or, in some cases, a private foundation.

Many advisors review your plan and portfolio on a regular schedule and adjust them as your life or the markets change. This usually includes regular reports on your accounts.

Advisors charge in several ways, and some combine more than one. The structure affects both what you pay and the incentives your advisor may have.

• Percentage of assets under management (AUM): The advisor charges a percentage of the assets they manage for you, usually billed quarterly. [Insert current typical range with a dated source.]
• Flat or retainer fee: A set fee for a defined scope of services, billed annually, quarterly, or monthly. [Insert current typical range with a dated source, or remove.]
• Hourly fee: You pay by the hour for planning or advice, often for a specific project. [Insert current typical range with a dated source, or remove.]
• Commissions: The advisor or their firm is paid when you buy certain products, such as insurance or some mutual funds. This can create conflicts of interest, because pay depends on what's sold.
• Performance-based fees: Fees are tied partly to investment results. These are less common and are generally only allowed for clients who meet SEC wealth thresholds.

You may also see the terms "fee-only" and "fee-based." A fee-only advisor is paid only by clients, not through commissions. A fee-based advisor may charge fees and also earn commissions, often because they're registered as both an adviser and a broker. Ask any advisor to explain every way they and their firm are paid.

A fiduciary is legally required to act in a client's best interest and to put the client's interests ahead of their own. Investment advisers registered with the SEC or a state owe this duty to their clients. The duty comes from the Investment Advisers Act of 1940, as interpreted by the courts and the SEC.

The fiduciary duty covers the entire advisory relationship, not just individual recommendations. It includes a duty of care, meaning advice must be suited to the client's goals and situation. It also includes a duty of loyalty, meaning the adviser must fully disclose conflicts of interest and not put their own interests first. Fiduciaries must also clearly disclose their fees and how they're paid.

Brokers work under a different standard. Since 2020, Regulation Best Interest has required broker-dealers to act in a customer's best interest when they make a recommendation. That standard applies at the time of each recommendation, and it isn't the same as an ongoing fiduciary duty. Because both advisers and brokers now use the phrase "best interest," it's worth looking more closely at which standard applies to you.

Knowing what's included in an advisor's fee, and how that fee is structured, helps you judge whether you're getting the services you need. It also helps you understand the incentives behind the advice you receive.

Chicago Partners is an SEC-registered investment adviser and acts as a fiduciary to our advisory clients. If you'd like to learn more about our services and fees, we invite you to contact one of our wealth advisors.

You can also request a complimentary Portfolio X-Ray, a review of your current asset allocation, you can contact us here.