The Minimum Investment for a Financial Advisor - SmartAsset (2024)

For some, working with a financial advisor may connote having pockets deep enough to meet with an expert in a mahogany-paneled office. But you don’t always need to be wealthy to benefit from financial advising. There are many types of advisors, and most investors will be able to find one who works for their specific situation.

A financial advisor can help you best determine if you are on track to meet your long-term financial goals. This expert can work to help you save more, reduce your debt and invest more wisely. But how much do you really need in order to invest with an advisor? We’ll unpack that below.

How Much Money Should You Have Before Hiring a Financial Advisor?

Investment managers, financial consultants, financial planners and even digital investment management services called robo-advisors are all considered financial advisors. As a result, minimum thresholds vary widely.

The amount of money that you’ll need to get approved as well as how much you should have before it really pays off might have the same answer. The right amount of money you’ll need will depend on what you’re looking for a financial advisor to do as well as how much you’ll have to pay in fees. Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor.

Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more. In general, if an advisor requires a minimum of $100,000 to open an account, you can assume that the financial advisor also offers wealth management services, tax and estate planning.

However, wealth managers are not the only financial advisors. People with less than $100,000 in assets can also benefit from hiring a certified advisor. If you have no or very little (we’re talking less than $25,000) in cash, you could speak to a Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA) who could help you formulate a starter plan to build up your assets.

Robo-advisors are also enjoying a surge in popularity, and they too are considered financial advisors. Many large investment firms, such as Fidelity, Vanguard, Merrill and Charles Schwab, offer robo-advisory services. Robo-advisors often charge no advisory fees, no commissions and, best of all, you can open an account with as little as $10. These accounts build diversified portfolios and invest your money in low-cost exchange-traded funds (ETFs).

When Should You Speak with a Financial Advisor?

The best time to speak with a financial advisor is simple: as soon as possible.

Financial planners may charge a fee to evaluate your financial position and recommend a plan that helps you towards your goals. Low-minimum robo-investment services make it accessible for lower-asset individuals to start building wealth early on, and if you do have a substantial amount of assets, speaking with a qualified advisor can help you decide where and how to manage your money over time.

How Much Do Financial Advisors Cost?

There are two types of financial advisors: fee-only and commission-based. Fee-only financial advisors are preferable, as you can be assured that they are not recommending investments to you in order to pad their bottom line. Commission-based advisors, on the other hand, are paid based on the product referrals and sales they make.

Fee-only financial advisors may charge an hourly, monthly or flat fee to recommend investments, adjust your asset-allocation and manage your portfolio. In the case of robo-advisors, there is often no advisory fee, but you could pay fees to buy and sell their recommended ETFs–which may be affiliated with the robo-advisor managing your account.

For a human advisor, expect to pay a fee. This may be a straightforward $200-per-hour fee, or it may be 1% of managed assets. Oftentimes, financial advisors require minimum investment thresholds so that 1% fee can cover their costs to manage your money. After all, 1% of a $100,000 minimum means they only earn $1,000 in a year from your account. In most cases though, financial advisors offer a menu of services so that potential clients can select the level of attention and help needed.

The Bottom Line

Financial advisors can help individuals across the board, so don’t wait to speak with one. They can help you reduce debt, save more and invest in ways that might not be possible without their help. You should look for fee-only advisors, as these financial advisors will best represent your interests over the long term.

Tips for Building Wealth

  • Not sure what investments and strategies will help you meet your long-term goals? For a solid financial plan, consider speaking with a qualified financial advisor. Finding a financial advisor doesn’t have to be hard.SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Use SmartAsset’s free investment calculator to get a good estimate of how to grow your money over time.

Next Steps

Do you want to learn more about financial advisors? Check out these articles:

  • What Is a Financial Advisor Disclosure?
  • Can a Financial Advisor Steal Your Money?
  • How much do Financial Advisors Charge?
  • What Commissions Do Financial Advisors Earn?
  • Are Financial Advisors worth it?

Photo credit: ©iStock.com/PeopleImages, ©iStock.com/MicroStockHub, ©iStock.com/arthon meekodong

The Minimum Investment for a Financial Advisor - SmartAsset (2024)

FAQs

What is the minimum investment for investment advisor? ›

Ans: Under how to become an independent advisor, an individual must have a net worth of Rs 5 lakh to be eligible for applying for an RIA (Registered Investment Advisor) certificate.

How much do you need to invest for a financial advisor? ›

A financial advisor who charges a percentage based on the assets they manage may be another option. This fee can range from 0.5% to 2%. Advisors that charge a percentage usually want to work with clients with a minimum portfolio of about $100,000.

At what net worth do I need a financial advisor? ›

Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more.

Does SmartAsset work for advisors? ›

SmartAsset AMP is designed to produce successful outcomes for advisors based on years of iterative testing and development. AMP provides the marketing systems and automations that advisors need to nurture and close clients effectively.

What is the minimum you need to invest? ›

The general rule of thumb is to have at least six months' worth of your household income set aside for emergencies, such as unexpected medical bills or losing your job. If money is tight, start by setting aside a small amount automatically every month. Remember: Starting small is better than doing nothing at all.

What is the minimum amount to start investing? ›

You don't have to have a lot of money to start investing. Many brokerages allow you to open an investing account with $0, and then you just have to purchase stock. Some brokers also offer paper trading, which lets you learn how to buy and sell with stock market simulators before you invest any real money.

Is it worth paying 1% to a financial advisor? ›

But, if you're already working with an advisor, the simplest way to determine whether a 1% fee is reasonable may be to look at what they've helped you accomplish. For example, if they've consistently helped you to earn a 12% return in your portfolio for five years running, then 1% may be a bargain.

Is it worth it to pay for a financial advisor? ›

A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.

Is it smart to invest with a financial advisor? ›

A good financial advisor or robo-advisor can be worth the cost if you're able to save more money, cut your expenses or better plan for the future. A financial advisor can also help you feel more secure in your financial situation, which can be priceless. But financial advisors can also come with high fees.

What are the disadvantages of a financial advisor? ›

The cost and the risk of conflicts of interest are the main disadvantages of working with a financial advisor.

How many millionaires use a financial advisor? ›

The study found that 70% of millionaires versus 37% of the general population work with a financial advisor.

Should I use a financial advisor from my bank? ›

Working with a bank financial advisor can save you money on your banking and loan products. Many banks look at your total relationship to waive monthly fees on your bank accounts or offer discounts on loans. Depending on your banking needs, these savings can be dramatic.

How does SmartAsset make money? ›

How Does SmartAsset Make Money? SmartAsset makes its money in two main ways: commissions and partnerships. Financial planners pay SmartAsset for directing potential clients their way. This amount depends on how much money the client has to invest.

How many people use SmartAsset? ›

SmartAsset is an online destination for consumer-focused financial information and advice. Reaching approximately 59 million people each month (as of January 2024) through its educational content and personalized calculators and tools, SmartAsset's mission is to help people make smart financial decisions.

Do millionaires use financial advisors? ›

Of high-net-worth individuals, 70 percent work with a financial advisor. You can compare that to just 37 percent in the general population.

Is $500 enough to start investing? ›

You'd be surprised just how far $500 can go when it's invested in the right way. Not only is it enough to start growing wealth in a meaningful way, but investing even a small amount can help you build positive investing habits that will help you to reach your future financial goals.

Can I start investing with $500? ›

You can start investing $500 by selecting an investment account, deciding whether you want help and diversifying with ETFs. In general, you should plan to stay invested for at least five years.

What is the 70% rule investing? ›

Basically, the rule says real estate investors should pay no more than 70% of a property's after-repair value (ARV) minus the cost of the repairs necessary to renovate the home. The ARV of a property is the amount a home could sell for after flippers renovate it.

Is $5 000 enough to start investing? ›

The possibilities widen at the $5,000 level. You have more options for mutual funds, individual company shares, index funds, IRAs, and for investing in real estate. While $5,000 isn't enough to purchase property or even to make a down payment, it's enough to get a stake in real estate in other ways.

References

Top Articles
Latest Posts
Article information

Author: Foster Heidenreich CPA

Last Updated:

Views: 5591

Rating: 4.6 / 5 (56 voted)

Reviews: 87% of readers found this page helpful

Author information

Name: Foster Heidenreich CPA

Birthday: 1995-01-14

Address: 55021 Usha Garden, North Larisa, DE 19209

Phone: +6812240846623

Job: Corporate Healthcare Strategist

Hobby: Singing, Listening to music, Rafting, LARPing, Gardening, Quilting, Rappelling

Introduction: My name is Foster Heidenreich CPA, I am a delightful, quaint, glorious, quaint, faithful, enchanting, fine person who loves writing and wants to share my knowledge and understanding with you.