Ask Terry Questions Financial Advisors Compensated by an Hourly Fee

Financial Advisors Compensated by an Hourly Fee

By Terry Savage on August 17, 2013 | Financial Planning / Retirement

What do you think about financial advisors who are paid on an hourly basis for advice about an investor’s portfolio? The advisor serves as a consultant, and is paid for the time taken to evaluate a portfolio and make specific recommendations. The investor takes care of the transactions.

SAVAGE SAYS: Well, given computer programs, it shouldn’t take much more than one hour to analyze anyone’s portfolio — so it can’t be a bad deal! Seriously, just an “analysis” of a portfolio is totally useless without a lot more time spent understanding your total financial picture, goals, obligations, and issues ranging from taxes to estate planning. That should take a lot longer than one hour!

I would suggest that you deal with a Certified Financial Planner ( and get a firm understanding of what the fees will cover. Many are “fee-only” advisors ( who do not take commissions from selling products ranging from mutual funds and stocks to insurance policies. Instead they charge hourly fees — and that is an excellent way to proceed — if you find a planner who makes you comfortable by asking enough questions about your situation to be sure they are giving appropriate advice.

But just a “fee for portfolio advice” misses the boat. It’s not just about the investment itself, it’s about the appropriate role of that investment in a total strategy that is worth paying a fee to an advisor.

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