$10,000 minimum fee for a financial advisor?


A percentage fee advisor will not have your best interests in mind. It's equivalent to usury, in my opinion.

A fixed-fee (or fee-only, or flat fee) financial planner is your best bet. There are several similar questions on this web site that may help you with your search.


TL:DR version: You are quite correct in your suspicion that the financial advisor who charges 1% of the assets under management (subject to a minimum of $10K) will not be providing enough value to justify the cost.

If you have money in company pension plans and you will actually be receiving a pension from the plan (as opposed to a 401(k) plan or 403(b) plan which have different rules), then typically, there is nothing to manage: all your money will continue to be held by the pension plan which will dole out your pension on a monthly basis. Some plans do have the option of getting a lump-sum payout (that you can roll over into an IRA to avoid paying taxes on the entire payout right away), but there can be a penalty for doing so: some plans will charge a substantial fee for the lump-sum payout as opposed to leaving the money in the plan. For example, the State Universities Retirement System of the State of Illinois credits (or used to credit) 8% annual compound interest on the (mandatory) contributions (plus previously credited interest) in determining the pension benefit, but if the retiree opts to take a lump-sum withdrawal in lieu of the pension, then the entire account value is recomputed as if only 4.5% annual compound interest had been credited over the years, which is a substantially smaller amount. The retiree who opts for a lump-sum payout also loses free healthcare insurance for life for retiree and spouse. In short, there is a huge whack for choosing a lump-sum withdrawal which will not be easily made up by handing over the lump sum to a financial planner (even if it goes into an IRA with the CFP (or his company or brokerage) as the IRA custodian).

On the other hand, if your money is in a 401(k) plan (or 403(b) plan), it is generally a good idea to roll over the money into an IRA upon retirement. Most 401(k) plans have excessive fees (403(b) plans less so), and offer investments that are not all that great or are restricted in various ways, and you are much better off rolling over the money into an IRA where you can get lower fees and better investment opportunities. Indeed, many mutual fund houses have no fees charged on IRA accounts larger than $25K$ or so (and even smaller minimums if you opt to receive your monthly/quarterly/annual statements electronically rather than on paper). Of course, you do continue to pay the fees corresponding to the expense ratios of the funds that you choose to invest in (same as in the 401(k) or 403(b) plan) but nothing extra (e.g. the $200 fee that the you mention). If your IRA money is substantial, mutual fund houses also offer free (or discounted) financial planning services (pretty much like a one-time fee-only financial planner), or assign you a personal representative (just like your $10K or 1% financial planner), give you free (or discounted) access to tools such as TurboTax, and so on. About the only two reasons to leave money in a 401(k) or 403(b) plan are that (i) the plan offers superior investment opportunities not available outside the plan, and (ii) money in a 401(k) plan or 403(b) plan is safe from creditors if you happen to have a personal judgement against you: creditors can, is some cases, go after your IRA money in order to collect but not after the 401(k) or 403(b) plan money. Note, however, that with 401(k), 403(b) plans as well as IRAs, it is necessary to take Required Minimum Distributions from these plans unless they happen to be Roth plans.


Professional financial advisors are often unscrupulous, charging way more than they are worth, investing your wealth in funds with high fees, and in general charging a lot for not very much or very good service. Sorry. It's just one of those professions where this is the norm. My advice is not to use them unless you really need them (like you have a LOT of money, a compulsive spending personality, or mental decline that makes you unable to do basic money management yourself).

One idea is to keep looking until you find an advisor who will charge a one-time fee for advice and not "manage" your assets---that is where you really get taken advantage of. Alternatively, there are lots of sources to get very good financial advise for free. People who get paid to give advice have a financial incentive to make the problem they address seem complicated when in fact it is not very much so. People who give advice away for free, including me, have the opposite incentive. Personal financial management is not rocket science.

You can see more details on my answer to this almost identical question.