The Truth About Financial Advisor Fees: What You're Really Paying For

Folks, I want to have an honest conversation about something that doesn't get nearly enough daylight in the financial planning world: fees.

Not in a sensational way. Not to make anyone feel bad about what they're currently paying. But because I genuinely believe that informed consumers make better decisions — and when it comes to financial advice, you have an absolute right to know exactly what you're paying and what you're getting in return.

After 25 years working with retirees across Greenville, Spartanburg, Anderson, Travelers Rest, and beyond, I've seen the full spectrum — people who were dramatically overpaying for very little service, people who were paying very little and getting exactly that, and people who were paying a fair price for excellent, comprehensive retirement planning that was genuinely changing their financial trajectory.

Let me walk you through what you need to know.

The Three Main Ways Financial Advisors Get Paid

1. Assets Under Management (AUM) Fees

The most common compensation model in wealth management is a percentage of the assets the advisor manages for you — typically 1% per year, though it generally ranges from 0.5% to 2% or more depending on the firm and the asset level¹. If you have $500,000 with an advisor charging 1% AUM, you're paying $5,000 per year. If you have $1 million, that's $10,000.

That number can feel abstract because it doesn't come as a bill — it's typically deducted directly from your account. And because it scales with your balance, many people never really stop calculating what they're paying annually.

AUM fees aren't inherently bad — they can align the advisor's interests with yours, since they earn more when your portfolio grows. But the key question is: what exactly do you get for that fee? Investment management only? Or a comprehensive retirement plan that includes income, tax, healthcare, and legacy planning?

2. Commissions

Some financial advisors — particularly those who work with insurance-based products like annuities, life insurance, and long-term care policies — are compensated through commissions paid by the product company, not directly by you.

This doesn't automatically make the recommendation wrong. Some of the most valuable tools in retirement planning — fixed index annuities, hybrid life/LTC products — do carry commissions. At Common Sense Retirement Planning, when we use these products, it's because we genuinely believe they serve the client's needs, not because of the commission. Transparency is key.

What you should always ask: 'What commission do you earn from this product?' and 'What are the surrender charges and how long is the surrender period?' A good advisor will answer both questions without hesitation.

3. Fee-Only

Fee-only advisors charge exclusively through direct client fees — flat fees, hourly rates, or AUM fees — and receive no product commissions. Fee-only is not inherently superior to other models, but it may eliminate some specific conflicts of interest around product recommendations.

The Hidden Cost That Most People Miss: The Gap in Your Financial Plan

Here's the conversation that I find myself having most often when new clients come in from Greenville, Spartanburg, or Anderson — and it's the one that surprises people most.

The fee their current advisor charges. That's usually not the problem. The problem is what they're not getting for that fee.

A hypothetical example: Gary and Patricia, both 62 from the Spartanburg area, had been paying their advisor 1% AUM on $850,000 in assets for seven years. That's roughly $8,500 per year, or about $59,000 over the relationship. When we sat down with them, we found:

• No written income plan — just an investment allocation
• No Social Security optimization analysis — they were planning to both claim at 62, leaving a significant lifetime benefit on the table
• No tax strategy — their large traditional IRA was on track to generate significant RMD problems in their 70s with no mitigation plan
• No long-term care plan
• Outdated beneficiary designations on two accounts

Over a 25-year retirement, those gaps — uncorrected — could easily cost Gary and Patricia hundreds of thousands of dollars. And yet their fee appeared 'reasonable' on paper. The issue wasn't the fee. It was the value delivered for that fee.

What You Should Expect for Your Money

Whether you work with us or someone else, here is what a fair and comprehensive relationship with a retirement-focused financial planner or financial advisor should include:

1. A written, personalized retirement income plan — not just an investment proposal
2. Social Security optimization analysis — especially for married couples
3. Tax planning coordination — RMD projections, Roth conversion analysis, bracket management
4. Medicare and healthcare cost planning — including IRMAA awareness and long-term care strategy
5. Estate and legacy planning coordination — at minimum a review and recommendation, ideally coordination with an estate attorney
6. Regular annual reviews — not just quarterly investment reports

If you're paying an advisor and not receiving most of those things, it's worth asking whether you're getting appropriate value for your money — and whether a more comprehensive relationship might serve you better.

How to Evaluate the Total Cost of Your Financial Advisor Relationship

Here's a practical exercise I recommend to anyone getting ready to retire in the Upstate. Sit down and calculate what you actually pay your advisor on an annual basis — not just the stated fee, but everything:

• AUM fee (multiply your balance by the percentage)
• Expense ratios on any mutual funds or ETFs in your portfolio (often 0.1% to 1%+ on top of the advisor fee)
• Any transaction fees or account fees

According to Morningstar, the average investor in actively managed mutual funds pays roughly 0.7% in fund expense ratios² on top of any advisor fee. Combined with a 1% AUM fee, that can add up to 1.7% or more per year on your total portfolio of $800,000 is $13,600 annually, every year.

That's not necessarily wrong, if the value delivered justifies it. But it should be clear and understood, not buried in fine print.

What We Believe About Fees at Common Sense Retirement Planning

We believe you deserve complete transparency about what you pay us and what you get for it. When we use annuity or insurance products, we'll tell you the commission. When we charge advisory fees, they'll be clearly disclosed. And we'll tell you exactly what services are included in this service, which, for every client, means the full five-pillar Common Sense Retirement Roadmap: income, investments, taxes, healthcare, and legacy.

We have offices in Greenville, Spartanburg, and Anderson. Our first conversation is always complimentary — and there's no obligation.

Get a Complimentary Second Opinion

If you'd like us to review what you're currently paying and what you're receiving for it, we'd be honored to do that.  Simply call (864) 235-2790 to schedule your appointment.  We look forward to serving you.

References

1. AdvisoryHQ. 'Average Financial Advisor Fees and Costs in 2024.' AdvisoryHQ.com, 2024.

2. Morningstar. '2023 U.S. Fund Fee Study.' Morningstar.com, 2024.

Securities and advisory services offered only by duly registered individuals through Madison Avenue Securities LLC, member FINRA/SIPC and a Registered Investment Advisor. MAS and Phillip Allen Inc. or Common Sense Retirement Planning are not affiliated entities.

The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Common Sense Retirement Planning.

Investing involves risk, including the potential loss of principal. Any references to protection, safety or lifetime income, generally refer to fixed insurance products, never securities or investments. The examples above are hypothetical in nature and intended for illustrative purposes only. Your results will vary. Past performance does not ensure future performance or results.

Our firm does not offer legal or tax advice. Consult your legal or tax advisor regarding your situation. A Roth IRA conversion is a taxable event.

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