The Number Of Americans That Use A Financial Planner Might Surprise You

Love them or hate them, financial planners can play an important role in anyone's financial journey. Individuals in this field know the ins and outs of the financial industry and its complexity, and can provide everything from retirement planning to investment advice and tax optimization strategies. Yet despite their expertise, many individuals choose not to work with a financial planner even after amassing the recommended $50,000 in savings. 

In fact, according to research group YouGov, only about 27% of Americans used a financial planner in 2024. The survey also found that men are more likely to consult with a financial advisor than women, and that individuals with postgraduate degrees or who earn higher incomes are also more likely to consult with a financial professional. As for why Americans choose not to seek financial advice from professionals, there are a number of reasons but trust and cost of services were the two most listed factors by respondents.  

Costs associated with meeting with a financial planner is one of the main reasons people often choose not to meet with one, and it's a very valid reason. Traditionally, financial planners charge clients a percentage of assets under management (AUM) fee that is deducted from an individual's investment portfolio on an annual basis. While the median fee itself is low at just 1% for portfolios under $1 million at the time of writing, according to Smart Asset, this widely used money method can cost individuals thousands over their lifetime. For example, if you start with $500,000 in an investment portfolio and plan to meet with an advisor for 20 years leading to your retirement, it can cost north of $200,000 in AUM fees, even though your portfolio value may have increased significantly.

Some financial planners are starting to move away from the AUM structure and instead charging clients yearly retainers. However, these options can still be pricey for many individuals. According to Nerd Wallet, it can cost between $2,500 and $9,200 a year to keep an advisor on retainer who can provide comprehensive planning and investment management. Luckily, there are still options to meet with a financial planner without having to spend thousands. For example, credit unions and 401(k) providers may offer those services at no additional cost; meanwhile, sites like Nectarine enable individuals to meet with advisors for flat hourly rates that range between $150 to $400 an hour. But ultimately, if you decide to work with a financial advisor, following a few simple tips can ensure you get your money's worth.