How Much Money Should You Have to Hire a Financial Advisor? (2024)

Depending on the net worth advisor you choose, you generally should consider hiring an advisor when you have between $50,000 - $1,000,000, but most prefer to start working with clients when they have between $100,000 - $500,000 in liquid assets. That is the level at which the benefits of hiring a financial advisor are likely to outweigh the costs. Most financial advisors prefer to work with clients in that range, since they want to provide value to their customers as well.

Now that we’ve given the general answer to how much money should you have for a financial advisor, let’s go into more of the specifics like:

When is someone considered wealthy?
How much money should you have for a wealth manager?
What money is included in these figures?
Do I need a financial advisor?

1. How Much Money Do You Need for Private Wealth?

One question that comes up frequently when people are thinking about financial planning is exactly what it means to be wealthy. This might be asked out of simple curiosity, wondering if you are wealthy, or what bank account balance it would take for you to become wealthy.

2. How Much Money Do I Need to Hire a Wealth Manager?

Firstly, let’s talk about what a wealth manager does, and how it’s different from a financial advisor, then dive into how much money you should have before hiring either. A financial advisor is an investment professional that advises clients on a range of financial areas, including tax planning, budgeting, investment management, retirement savings and more. A wealth manager is a specific type of financial advisor who generally works with high or ultra high net worth individuals. Investopedia defines a high net worth individual as someone who has $1 million or more in liquid assets. So in general, you would need $1 million in liquid assets to hire a wealth manager.

If you have been using a financial advisor (or considering it) but are now moving into the high net worth individual category as your assets have grown to above $1 million, it may be time to consider a wealth manager instead. The financial needs and opportunities of high and ultra high net worth individuals is going to be different then those in different categories. Using the right professional for your situation will allow them to serve you better. At Delta Wealth Advisors, we specialize in helping hardworking business owners and executives achieve their financial goals. Specializing in this way lets us provide the most benefits for our clients using our targeted experience most effectively.

3. What Money Is Considered Liquid Assets?

We’ve used the term liquid assets several times as we’ve been talking about how much money someone would need to hire a financial advisor. But what does that mean? Does it include things like your house, car, retirement funds, etc?

In general, liquid assets are considered to be cash, or things that can be quickly and easily converted into cash without losing value. Stocks, bonds, bank accounts, and actual cash money are all common forms of liquid assets, and they would be included in the calculation of how much money you should have to hire a financial advisor or wealth manager. The estimated value of your real estate holdings (including your home), car, works of art, or other physical things that would need to be sold in order to generate cash generally are not considered liquid assets for these types of calculations.

Most financial advisors, however, would be happy to discuss with you the different assets you hold. If you have a significant portion of your investments in the form of real estate or a fine art collection, many wealth managers would still be happy and able to work with you. Don’t let the exact dollar amounts and whether they are liquid or illiquid stop you from reaching out to a wealth manager or financial planner. Most will be happy to answer your questions and work through these figures with you, and these rules are not hard and fast.

4. Does the Average Person Need a Financial Advisor?

At the end of the day, the question of if you, or anyone else, needs a financial advisor involves a few different pieces of information. The first is if you have enough money to make their advice worth it-that is to say, will they save or make you more money then you pay them. That’s what we’ve been talking about so far, and if you have over $100,000 in liquid assets, the answer is probably yes.

The second thing to consider is if you are in need of financial advice and management. For some people, managing their money and keeping close track of the stock market, real estate investment opportunities, and the latest tax code is something they enjoy and are good at. If this is true for you, you may not need a financial advisor because you may have the time and skills needed to excel at this on your own. But for many others, staying current on all the aspects a financial planner needs to know is something that they don’t have the time or desire to learn. If this sounds more like you, you may need a financial professional to get the most out of your assets.

Delta Wealth Advisors: Comprehensive Financial Planning

We at Delta Wealth Advisors don’t want to create a financial plan once and let it sit on a shelf. We work with you to create a flexible, actionable plan that empowers you to achieve your financial dreams. We focus on collaboration and frequent check-ins to make sure you stay on track with your goals. And our record of working with business owners and executives means we are able to offer new insights into your specific challenges based on our past familiarity with these fields. This means you can be more confident in your insights and financial decisions, knowing they are based on years of experience.

Check out our website’s Resources Page to see what all we have to offer, or schedule a call today to get started!

FAQs

How Much Money Should You Have to Hire a Financial Advisor? ›

Some traditional financial advisors have minimum investment amounts they require to work with clients. These can range from $20,000 to $500,000 or even more. Why? Because their fees need to cover their time and expertise, and managing smaller portfolios may not be cost-effective for them.

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How much money should I have to hire 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.

How much do I need to use a financial advisor? ›

Your adviser's fees will be based on many things: what advice you need, how much time it will take, and the size of the assets involved. Advisers often charge between 1% and 2% of the asset in question (e.g. a pension pot), with lower percentages being charged for larger assets.

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Is a 1 fee worth it for a financial advisor? ›

While 1.5% is on the higher end for financial advisor services, if that's what it takes to get the returns you want, then it's not overpaying, so to speak. Staying around 1% for your fee may be standard, but it certainly isn't the high end. You need to decide what you're willing to pay for what you're receiving.

Is 2% high for a financial advisor? ›

Answer: From a regulatory perspective, it's usually prohibited to ever charge more than 2%, so it's common to see fees range from as low as 0.25% all the way up to 2%, says certified financial planner Taylor Jessee at Impact Financial.

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

If, however, you have some money you want to invest, maybe you run a business, or you come into an inheritance, a financial advisor is a good idea to help you navigate financial decisions. Their time might seem expensive, but consider the time you would need to spend to learn as much as they know.

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What are the pros and cons of hiring a financial advisor? ›

Pros of hiring a financial advisor include gaining access to expertise, leveraging time, and sharing responsibility. However, there are also potential downsides to consider, such as costs and fees, quality of service, and the risk of abandonment.

At what point is it worth getting 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.

What are the disadvantages of a financial advisor? ›

Disadvantages of a Certified Financial Adviser

Perhaps the most significant concern of hiring a financial adviser is that they don't always have your best interests in mind. Despite many advisers making decisions that will benefit the client, it is not unusual for conflicts of interest to arise.

How much does Fidelity charge for a financial advisor? ›

There is no advisory fee for accounts with less than $25,000. Investments of $25,000 or more are charged 0.35% per year, but that level gets you unlimited one-on-one financial coaching sessions.