How much does a financial advisor cost in Canada?

When comparing financial advisers, individuals frequently inquire about the typical financial advisor costs in Canada. This question closely relates to one of our fundamental investment principles: “Use reduced investment instruments and minimize transaction expenses.” The costs you pay for your investments and planning have a direct influence on the results you get. Paying fewer fees is the most effective strategy to enhance return. In this article, we will break down the common structures, and the average rates, so you can determine which route might be the most beneficial for you and your financial future.

What does a Financial Advisor do?

A financial adviser assists you in developing and implementing a financial strategy. Your financial professionals will figure out how much money you have now, how much you’ll need in the future, and how you’ll increase it. Then, perhaps, it will assist you in growing it! Either by assisting you in making some judgments or by making nearly all of them for you. This could be by establishing key financial goals, retirement goals, or planning future goals with your loved ones in mind. Your advisor will help create the right financial plan custom for just you, so you can live your life with some peace of mind.

How Do Financial Advisors Charge in Canada?

Financial advisers charge their customers in one of three ways: by the hour, a fixed fee, or a portion of their investments. Your financial adviser should always inform you of the billing system they employ, as well as the projected expenses for your needs.

If your financial adviser charges a flat cost, you’ll be paid a one-time fee that covers everything from your initial financial health check to adopting the financial advisor’s suggestions. For any ongoing maintenance that is necessary, you may be charged an annual management fee. 

An hourly rate is the second choice. The hourly rate is simple, making it much easier to grasp how the total amount is defined. Hourly fees, on the other hand, are more difficult to predict since it’s impossible to tell how much time a financial adviser will need to spend on your case until they dig deeper into your needs.

Finally, many fiancial advisors charge a flat fee based on the amount of money you wish to invest.

According to Bark.com, the initial advice and set-up generally cost about 2.4 percent of your investment, followed by a 1 percent yearly charge for ongoing advice and administration. 

What are the Average Financial Advisor Fees in Canada?

Advisors across Canada utilize different financial products based on the extensiveness of their involvement with their clients. The charts below will give you a better idea of the general costs associated with the three different models used by financial professionals.

Average Financial Advisor Hourly Costs in Canada

Financial Advisor hourly costs about $220 with the average cost ranging from $150 to $350 which includes digging deeper into your current financial situation and determining the proper goals and structure for your success.

Average Financial Advisor Fee-Only Costs in Canada

According to Smartasset.com “The exact cost of a fee-only financial planner will depend on the way they charge their clients, the services you require, and your location. More experienced advisors may charge higher fees as well. Generally speaking, fee-only financial planners will charge between $1,000 to $5,000 annually. This type of advice model is great for risk management, by not paying more when your financial portfolio continues to grow.

Average Financial Advisor Commission Costs in Canada

According to Morningstar, the average MER  (Management Expense Ratio) on an equity fund in Canada is 2.28%. For portfolios under $500,000, if you are working with an advisor and have an actively managed portfolio, you can typically expect to pay between 2% and 2.5%.

Wealth management fees comparison in Canada

Investopedia says that “The average fee for a financial advisor’s services is 1.02% of assets under management (AUM) annually for an account of $1 million.”

The Pros of Choosing a Fee-Only Advisor

Working with a fee-only financial advisor has the advantage of knowing that they are just looking out for your best interests. Fee-only advisors do not rely on what they sell to you to generate money, thus they are there to assist you with your finances rather than their own. They must act in your best interests as a fiduciary, ensuring that they will act in your best interests. 

How to pick the right fee-for-service financial planner

Fee-for-service financial planning, in which planners charge an hourly or fixed cost for their services rather than being compensated through commissions and fees connected with the sale or administration of investments, is becoming increasingly popular. Most people who seek out fee-for-service financial planners are focused on reducing the costs that would normally be associated with such advisory services. The best thing you can do when you’re looking for a fee-only financial advisor is to have a conversation with them!

Online Financial Advisors in Canada

Worthy Financial provides senior-level financial advisory services in Halifax, NS. We also service clients across Canada, including across Nova Scotia (Bedford, Dartmouth, Truro, Cape Breton). If you’re looking for financial service planners to help bridge your now, to your future financial goals, contact our team today for a free consultation!