Financial Planning Services and Costs

According to a Gallup poll, 43% of U.S. adults consult friends and family, and 41% rely on financial advisors.¹Paying a professional can help you plan your financial future, and the benefits can often outweigh the costs. Let’s review the basics of financial planning and how costs are calculated, so that you can make an informed decision.

Key takeaways

The best type of financial planning is tailored to your specific needs, goals, and assets.
The cost of working with a financial professional varies based on their fee-model.
Financial planning can include retirement, insurance, investment, estate, and protection strategies.

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Types of financial planning services

There are a few different types of financial planning services, and each one serves a different purpose based on your income, needs, and goals.

What is financial planning?

Financial planning is when an expert reviews your entire financial picture to help you set short- and long-term financial goals.²Anyone can explore financial planning services, especially if you need help setting specific goals and meeting them. The benefits of professional financial planning include:

Goal setting: Evaluating your current finances and setting a road-map for your short- and long-term goals from a financial professional.
Retirement planning: Determining how much you’ll need in retirement and building a strategy around it through savings and investments.
Estate planning: Arranging how your assets will be managed and distributed after you die through a will, trust, and beneficiary designations.
Investment planning: Guidance around saving, investing, asset allocation, and building long-term financial strategies aligned with your goals and risk tolerance.

Some financial professionals also offer specialized planning options, like special needs planning, or help setting up a business and planning for its continued success.

Cost of financial planning services

Combine the costs of financial products with the fees a professional may charge to create a comprehensive plan. But remember, not everyone pays the same amount, and in some cases, you may pay little to nothing out of pocket.

Average costs of insurance solutions

Insurance is one of the most common financial planning tools, and its cost varies widely depending on your age, health, and the type and amount of coverage.

When it comes to term life insurance, a $500,000, 20-year term policy could cost as little as $27 per month. Premiums are primarily based on life expectancy based on an applicant's age, health, hobbies, and medical history.³

Permanent life insurance, like whole or universal life, carries higher premiums because it doesn't expire. Permanent life insurance may include an investment-like component called cash value, which you can borrow from while you're still alive.⁴

Other insurance products for long-term care, disability coverage, or annuities have their own premium structures and are typically priced based on similar risk factors. Talk to a financial professional to help you weigh which types of coverage fit your situation and budget.

Average costs of investment solutions

The cost for investment solutions depends on the type of account, the investments inside it, and whether you work with a professional to manage your portfolio.

The most expensive fee you may face is called “assets under management” (AUM) — a percentage of the assets an advisor manages on your behalf. The national AUM fee is about 1.02%, but it sometimes decreases as your portfolio's AUM increases.⁵

Investments within your portfolio may also carry their own expense ratios, ranging from 0.05% to over 1% annually, depending on the types of funds used. These fees are separate from the advisor's AUM fee.⁶

Costs of a financial plan

The good news is that you may not have to pay a separate fee for initial discussions with a financial professional. Depending on the firm and services provided, some financial professionals may include foundational goals and needs discussions as part of the overall client relationship.

For others with more complex needs, there may be additional charges based on the complexity of your finances. The median charge for a stand-alone financial plan like this is $3,000, though simpler plans average around $2,750.⁷

Whether your plan is straight-forward or sophisticated, you need regular ongoing guidance to optimize your financial plan as your life evolves. Look for financial professionals who specialize in building a trusted relationship – they can be a valuable resource when life changes happen.

Some financial professionals do not charge an extra layer of fees for this level of guidance. Others charge retainer subscriptions that range from $2,500 to $9,200 per year, or $200 to $400 an hour.⁸

Finding financial planning services right now

First, check to see what your employer already offers. Many organizations offer financial wellness programs that may include access to financial coaching or counseling, digital tools for budgeting and goal-setting, and employer-sponsored savings programs. Some programs have virtual or in-person financial education classes, and others may offer one-on-one financial counseling.

If your employer offers access to a financial planner or wellness program, taking advantage of it could be a first, and cost-effective, step to getting professional guidance.

What New York Life can offer

New York Life has over 12,000 financial professionals nationwide who specialize in helping you identify your needs, build towards your goals, and offer you guidance along the way.

Your 3 next moves

Check to see if your employee benefits include financial planning.
Review your finances to get an idea of the level of support you need.
Schedule a quick call with a financial professional to see if their services match your needs.

Financial planning services and costs FAQs

When you pay a percentage of assets under management (AUM), the dollar amount you pay may increase as your assets grow, although the percentage fee itself often stays the same or decreases at higher asset levels. Look for firms that use blended rate tables; your percentage goes down as your wealth increases.⁹ Compare flat-fee options with percentage-based fees to see which is more cost-effective, and review which fees you’re responsible for, such as commissions, transfer fees, and administration charges.¹⁰

Yes, you can do your own financial planning, but you may miss out on potential earnings by skipping professional advice. You’ll have to learn everything it takes to manage your own finances, which changes just as you do over time.

What your fee covers depends on the services provided and how your financial professional is compensated. Costs may include planning fees, investment-related fees, insurance product costs, or administrative charges depending on your needs and solutions selected.

When you meet with a financial professional, you can ask how they get paid. Some are paid solely through you, the client, while others are paid through commissions.