Introduction:
With so many advice models available today, it’s clear the landscape of financial planning is rapidly changing. But, there’s common misconception I’d like to discuss. Are flat fee advisors really the more affordable option? I mean, it sounds simple enough, right? You pay one set amount and get access to your advisor throughout the year. But here’s where it gets tricky: that flat fee can often end up being much more expensive than you need, especially if you’re not getting the constant advice or hands-on management that would make it worth the price.
Let’s be real—most of us aren’t looking to have deep financial strategy meetings every other week. For a lot of people, just a few hours of personalized advice is more than enough. This is where hourly financial advisors really shine. In this post, we’re going to break down the difference between flat fee and hourly advisors, dig into why hourly might actually save you more money, and help you figure out which approach fits your financial goals best.
If you’re someone who likes flexibility, transparency, and paying for exactly what you need (and nothing more), hourly advice might be the way to go.
What are Flat Fee Financial Advisors?
Flat fee financial advisors charge a set amount—usually annually—for their services, and in return, you get a package of financial advice and planning. On paper, it sounds convenient because you know exactly what you’re paying upfront.
However, the reality is that these fees can range anywhere from $2,000 to $6,000 a year, and what you’re paying for often depends on the level of service you need. For some people, this works if they require constant financial oversight, but for most, it’s easy to end up paying for more than you actually use. A lot of flat fee models include a limited number of meetings or services, and if you need extra help outside of that, you might face additional charges.
So, while the idea of a flat fee might seem straightforward, it’s worth asking: is it really worth the cost if you only need financial advice a few times a year?
What are Hourly Financial Advisors?
Now let’s talk about hourly financial advisors. Instead of paying an ongoing fee, you only pay for the time you actually use. Need one hour to talk through your retirement plan? You pay for that one hour. Need a few more hours to dive deeper into tax planning? That’s what you pay for—no more, no less.
This model works really well for people who don’t need constant hand-holding or full-time management of their finances. Maybe you’re a DIY investor, or you’ve already got your financial situation pretty well set up and just need occasional advice to tweak or adjust things. Or, you could be a complete novice who wants a partner and teacher to help you get started without paying an ongoing fee. That’s where hourly advisors really shine. You get personalized advice when you need it, without being locked into a long-term contract or paying for services you don’t use.
The beauty of the hourly model is its flexibility and transparency. You can control how much or how little help you get, and you’re never left wondering if you’re overpaying for advice you don’t need. It’s perfect for those who value both their time and their money.
How the Costs Really Add Up
Let’s get down to the numbers, because this is where the difference between flat fee and hourly advisors becomes crystal clear.
Take a big-name, flat fee firm—whose name I won’t mention—as an example. If you want your own dedicated CFP® who can meet after regular business hours, you’re looking at a price tag of $6,000 a year. That fee includes just 6 virtual sessions in the first year. Now, let’s compare that to an hourly advisor. If you had 6 meetings with an advisor charging $250 an hour, you’d spend only $1,500. That’s a savings of $4,500—money that could be better spent growing your investments, paying off debt, or even enjoying a nice vacation.
Now, think about this: saving $4,500 per year for 30 years and investing it with an 8% annual return would grow to over $500,000. That’s half a million dollars that could be sitting in your retirement account instead of paying for services you might not even need!
And here’s the kicker: many people don’t even need 6 meetings. What if you only need 1 or 2 sessions in a year? With an hourly advisor, you’re not locked into a high annual fee, so you only pay for what you need. The flexibility to get targeted advice when it matters—without ongoing commitments—can be a game-changer for your wallet.
So, while flat fees may seem predictable, they can quickly add up to a much higher cost than most people expect. And if your financial situation is relatively straightforward or you only need advice once in a while, why pay more?
The Freedom of Hourly Advice
Hourly financial advisors offer a level of flexibility and control that flat fee advisors just can’t match. Instead of paying thousands upfront, you only pay for the advice and time you actually need. This can make a huge difference, especially if your financial needs are straightforward or you only need help once or twice a year.
One of the biggest advantages of working with an hourly advisor is the feeling of partnership. You’re not just another client they’re trying to retain for years on end. Instead, you’re working with someone who’s focused on giving you the tools and confidence to make your own informed financial decisions. This isn’t about locking you into an ongoing relationship—it’s about empowering you.
When you work with an hourly planner, they aren’t managing your money for you. And that’s a good thing! It gives you the chance to learn and stay involved, rather than just handing over the keys and hoping for the best. You get to take control of your financial future with a knowledgeable partner by your side, guiding you through the process. This not only provides valuable knowledge that you can use throughout your life but also brings a sense of fulfillment. There’s real confidence in knowing you’re making informed decisions, rather than relying on someone else to do it for you.
In short, working with an hourly advisor means you get tailored advice when you need it, without the long-term commitment or extra fees. You walk away not just with answers, but with the confidence to manage your own finances going forward.
Flat Fee or Hourly: Which Fits Your Needs?
At the end of the day, choosing between a flat fee and an hourly advisor comes down to what fits your personal financial needs and goals. If you require constant financial oversight and complex management year-round, a flat fee advisor might make sense. But for most people—especially those with simpler needs or who prefer to stay involved in their own financial planning—hourly advice is often the smarter, more cost-effective choice.
Hourly advisors give you the flexibility to get advice when you need it, without locking you into expensive, ongoing fees. Whether you’re a DIY investor who just needs occasional guidance, or a complete novice looking for a financial partner, hourly planners provide personalized support without the long-term commitment or high costs of a flat fee model.
In the end, it’s not just about saving money—it’s about getting the advice you need in a way that works for you. So, before you commit to any advisor, meet with a few.
If you’re curious about how hourly financial advice could work for you, schedule a free consultation today and let’s chat about how we can get you the advice you need—on your terms.