What Is a Financial Planner: Services, Fees and Credentials to Know
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Key things to know about hiring a financial planner
Look for credentials over titles. “Financial planner” isn’t a regulated term. "Anyone can call themselves a financial planner. But those with a certified financial planner (CFP®), chartered financial consultant (ChFC) or certified public accountant or personal financial specialist (CPA/PFS) designation have at least completed formal training and passed an exam. CFPs in particular have a fiduciary obligation to their clients.
Decide what you want first. Whether that’s a one-time plan, ongoing investment management or both, this decision can help you focus only on financial professionals that meet your needs.
How a financial planner charges for their services can vary. A one-time, flat-fee plan may run a few thousand dollars, while ongoing, active investment management usually costs a percentage of your assets each year (around 1% is common).
Do you need a financial planner?
Generally, the more complex your finances are, the more likely you may benefit from working with an experienced professional, whether that looks like active investment management or financial advice-only. Additionally, if you’re going through a major life change that comes with financial ramifications, such as marriage or divorce, or starting a business or receiving an inheritance, a financial planner can map out the short- and long-term effects on your finances.
If your finances are relatively simple – for example, you’re a single W-2 employee with a solid emergency fund and 401(k) set in a target-date fund – you likely don’t need ongoing active management. But you could meet with a financial planner on an as-needed basis to pressure-test your financial plan or review investments in your individual brokerage account.
When you're shopping for a financial planner, you might come across a lot of people with other professional titles. Below are some common types of financial professionals (expand to show more):
Common types | What to look for | Useful for |
|---|---|---|
Certified financial planners (CFPs) | The CFP designation indicates that a provider has gone through a rigorous formal training and testing process. They are fiduciaries. | CFPs may be able to address complicated or ongoing planning needs and provide investment management. |
Chartered financial consultants (ChFCs) | ChFCs have completed education requirements similar to CFPs. They are fiduciaries and must adhere to The American College of Financial Service’s code of ethics. | ChFCs may be able to address complicated or ongoing planning needs and provide investment management. |
Wealth advisors | Wealth advisors typically work with high-net-worth individuals to create a tailored investment and financial strategy to help them manage their assets, reduce risk and leave a legacy. | People with at least $1 million to invest. |
Financial coaches | Some financial coaches have completed training programs by the Association for Financial Counseling and Planning Education (AFCPE). Look for one who holds either the AFCPE’s Accredited Financial Counselor designation or Sage Financial Solutions’ Accredited Personal Financial Coach designation. They don’t manage investments. | People learning the basics of financial literacy, such as how to save money or reduce spending. |
Financial counselors | Financial counselors help clients with budgeting, debt and saving. They often work at banks, credit unions or other agencies. They may also assist with navigating public benefits. The title “financial counselor” isn’t regulated, and it doesn’t guarantee the person has specific training. | Help with things like budgeting and saving, rather than with investments. |
Certified Public Accountants (CPAs) | A CPA prepares and files income taxes. They typically have deep knowledge of tax law and of any critical tax changes affecting your situation. They typically do not provide investment advice. | People who need specific tax advice or tax preparation. |
Robo-advisors | Robo-advisors use algorithms to build and manage a portfolio of low-cost investments suited to your financial goal. The algorithm determines the investment mix and automatically adjusts it when needed. The minimum investment is usually small. | Investment management only. |
🤔 Can I use AI in place of a human financial planner?
For some basic tasks, yes. AI can be useful for foundational knowledge and low-risk tasks, such as sketching a budget or doing a quick estimate. However, AI isn't a fiduciary, so it has no legal obligation to act in your interest and can't be held accountable if it's wrong. It can sound authoritative while being outdated or incorrect, and it can't connect your investments, taxes, insurance and estate decisions to your larger financial future the way a human planner can. A human advisor may be better suited to help navigate emotional personal situations, such as a divorce, an inheritance or selling a business. If all you want is automated investing at a low-cost, consider a robo-advisor (here's our list of the best robo-advisors for 2026).
Do you want a financial plan, investment management or both?
This is a crucial decision, as it will determine who you hire and how much you'll pay. Financial planners typically provide three things:
A financial plan. This is a written roadmap covering your goals, savings, debts, taxes, insurance, retirement, estate needs and major life events. This can be a one-time deliverable, or you can refresh the plan on an ongoing basis (potentially once a year) with the advisor.
Investment management. Also called “active management,” this is when the financial planner manages an investment portfolio for you and makes decisions such as buying and trading. For this service, you’ll typically pay a percentage on those assets every year.
Both. Some advisors offer both of these services by writing you a plan and then carrying it out on your behalf. This is what most advisory firms offer, and is often most suitable for those with complicated finances or prefer not to manage investments themselves.
How do financial planners charge for their services?
Financial planner costs typically fall into two buckets: fee-only and fee-based.
A fee-only advisor is paid only by you, with no commissions or referrals.
A fee-based planner is paid by both client fees and commissions or other compensation.
If your advisor is a registered investment advisory (RIA), you can get more information about their fees by looking at their Form ADV, which they file with the SEC.
Here’s a breakdown of common fees types.
Fee type | Commonly associated with | Typical cost |
|---|---|---|
Assets under management (AUM) | Managing your portfolio of stocks, bonds and other investments. | 0.25% to 0.50% annually for a robo-advisor; about 1% for a financial advisor. |
Flat annual fee (retainer) | Special projects, such as analyzing whether to buy or sell your business. May also provide more access to the advisor. In some cases, advisors may substitute flat fees for AUM fees. | Typically $2,500 to $9,200. |
Hourly fee | Special projects, such as helping create a financial plan for a specific situation, such as a divorce. | $200 to $400. |
Per-plan fee | Creating a detailed, written comprehensive financial plan for a client. | Typically $3,000, but varies by service. |
Transaction costs and expense ratios | Fees that trading platforms charge the advisor to use, or fees that mutual funds, ETFs and similar instruments charge. | Varies; expense ratios may range 0.05% to 0.75%. |
Custodial fees | Fees that the custodian charges you to hold your assets. | May be around 0.10% to 0.15%, but varies by account size, asset type, transaction activity and custodian. |
Bundles the firm’s investment management services and related custodial transaction costs together for one price. | Varies by account size and type. | |
Commission | Money earned from financial institutions for buying or selling certain products to clients. | 3% to 6% of investment transaction amount. |
To compile this information, we reviewed industry studies on average rates among financial advisors. Those studies included:
We also reviewed fees charged by providers reviewed by the NerdWallet investing team. | ||
» Want to know more about cost? Read an overview of financial advisor fees
Is a financial planner the right professional for you?
A financial planner is one of many options when it comes to getting financial advice. Use this below to help decide the best person for your needs:
If you primarily want... | Consider | Why |
|---|---|---|
A full financial plan and / or someone to manage your investments | A financial planner with a CFP or ChFC designation | Trained to handle goals, investments, taxes, insurance and retirement together. CFPs are fiduciaries when providing financial planning. |
Hands-off investment management at a low cost | A robo-advisor | Algorithms build and manage the portfolio. Generally low-cost, with small to no account minimums and low expense ratios, but no comprehensive planning. |
Help with budgeting, debt or building money habits | A financial coach or counselor | Focus on the basics of saving and spending. They usually don't manage investments and may cost less than a financial advisor. |
Tax preparation or specific tax advice | A CPA | Deep tax expertise. Most don't provide investment advice, unless they are also an RIA. |
What to explore next:
Ready to find a financial advisor? NerdWallet's guide to selecting (and vetting) financial advisors.
Prepare for the first meeting: Get to know a financial advisor with these 8 questions
Want a list of advisors? Search for a financial advisor near you
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