How Financial Advisors Get Paid: A Denver-Area Guide to Advisor Fees
Quick answer: Financial advisors are paid in five main ways: commissions on products they sell, a percentage of the assets they manage (AUM), a mix of the two ("fee-based"), flat or subscription fees, and hourly fees. Across the industry, asset-based fees now make up about 72% of advisor compensation and commissions about 23%, according to Cerulli Associates. The model your advisor uses shapes both what you pay and what they recommend.
If you live in Arvada or anywhere in the Denver area, you have plenty of advisors to choose from. The Bureau of Labor Statistics counted 4,370 personal financial advisors employed in the Denver-Aurora-Centennial metro in May 2024, about 1.5 times the national concentration. (That count excludes self-employed advisors, so the real number is higher.) With that many options, understanding how each one is paid is the fastest way to compare them.
The 5 ways financial advisors are compensated
Pay model | How it works | Typical cost (national data) | Key conflict to watch |
Commission | Paid by product companies when you buy | Mutual fund loads often 4.5–5.75%; variable annuity commissions typically above 5% | Incentive to sell products, and higher-paying ones |
Assets under management (AUM) | Annual % of the portfolio they manage | Median 1% up to $1M, falling to about 0.5% above $5M | Incentive to gather assets; discourages paying down debt or buying annuities outside their management |
Fee-based (hybrid) | AUM or planning fees plus commissions | Both of the above | Same person can switch between "fee" and "commission" hats |
Flat / subscription | Set project fee or recurring retainer | Plans roughly $1,000–$5,000 (median $3,000); retainers from about $600 to well over $10,000 per year (median $4,500) | Retainer continues whether or not you need ongoing work |
Hourly | Pay for time spent on your questions | Roughly $150–$400+ per hour (median $300) | Fewest conflicts; you control scope and spend |
Sources: Cerulli Associates (2025), Kitces Research (2024), Kitces Research (2020), Kitces/Veres AUM study.
1. Commissions: paid by the product, not by you directly
Commission-based advisors are typically registered representatives of a broker-dealer or licensed insurance agents. You don't write them a check. Instead, the product company pays them when you buy.
Mutual fund sales loads. Class A shares often carry a front-end load of up to 5.75%. Invest $50,000 and about $2,875 goes to sales charges before a dollar is invested. Many funds also charge ongoing 12b-1 fees of up to 1% per year, part of which continues to pay the selling broker for as long as you own the fund.
Annuities and insurance. Variable annuity commissions are typically above 5%, on top of ongoing insurance fees and surrender charges if you exit early.
Commissions are shrinking. Cerulli projects that by 2026 only about 1% of advisors will be commission-only.
2. Assets under management (AUM): the industry default
Under the AUM model, you pay a yearly percentage of the investments the advisor manages, usually billed quarterly straight from your account.
Kitces Research and Bob Veres' Inside Information survey of roughly 1,000 advisors found:
The median AUM fee is 1% for portfolios up to $1 million.
It steps down as balances grow: about 0.85% above $1M, 0.75% above $2M, and 0.50% above $5M.
The all-in cost, adding the expense ratios of the funds inside the portfolio, averaged about 1.65%. For smaller clients, the median all-in cost was 1.85%.
Why it matters: Here's how much a 1% ongoing fee compounds over time. A $100,000 portfolio growing 4% a year is worth about $208,000 after 20 years with a 0.25% annual fee, but only about $179,000 with a 1% fee. That's roughly $29,000 lost to the difference in fees.
AUM can work well for people who want someone to run their portfolio indefinitely. The trade-off is that the cost rises with your wealth, whether or not your needs become more complex.
3. Fee-based: the hybrid that sounds like fee-only
"Fee-based" advisors charge AUM or planning fees and can also earn commissions. Most are dually registered, holding both an investment adviser and a broker-dealer license. The name is easy to confuse with fee-only, so read the firm's disclosures carefully. Cerulli expects 77.6% of the wealth management industry to be on a fee-based model in 2026, largely as broker-dealers convert commission accounts into asset-based fees.
4. Flat fees and subscriptions
Some advisors charge a set price for a defined project, such as a retirement plan, or a recurring retainer for ongoing access. Prices vary widely with scope and complexity:
Standalone plans: Kitces Research found typical fees ranging from about $1,000 to $4,820.
Retainers and subscriptions: Kitces Research found annual retainers ranging from as little as $600 to as much as $40,000, with a 2024 median of $4,500, up from $3,000 in 2022.
Cerulli reports that about 21% of advisors now earn at least some revenue from financial planning fees, making it the most common alternative to AUM.
5. Hourly: paying only for the advice you use
Hourly advisors bill for time spent, just as an attorney or CPA would. Rates range from roughly $150 to $400 or more per hour, depending on the advisor's credentials, experience and the complexity of the work. Kitces Research put the 2024 median at $300 per hour, up from $250 in 2022. Total cost depends on scope: a single focused question may take a few hours, while a full plan billed hourly takes longer. Because the fee is tied to the work rather than to your portfolio or a product sale, hourly is the most direct way to separate advice from selling.
Every member of the Garrett Planning Network offers planning on an hourly, as-needed basis. That is a membership requirement, not an option.
Questions to ask any Denver or Arvada financial advisor
"How are you paid, and by whom?" Listen for any compensation from product companies.
"What will I pay in total, in dollars, in year one?" Include fund expenses, not just the advisory fee.
"Are you a fiduciary at all times, for all of my accounts?"
"Can I see your Form ADV Part 2?" It spells out the firm's fees and conflicts.
"Do I have to move my investments to work with you?"
How Montgomery Financial Planning is paid
Montgomery Financial Planning is a fee-only, fiduciary firm based in Arvada, Colorado. I'm Christopher Bahnsen, MS, MPAS™, CLU®, and here is exactly how my firm is paid:
By clients only. No commissions, no product sales, and no percentage of your assets.
Hourly, by project. You get a written estimate before work begins, and we never bill beyond it without your approval. Current rates are on our pricing page.
Garrett Planning Network member. Every Garrett advisor offers hourly, as-needed planning.
FeeOnlyNetwork member. Vetted as a fee-only fiduciary.
Local and virtual. Based in Arvada and serving the Denver metro, with clients in other states through virtual meetings.
For a deeper look at the hourly model, see 3 Benefits of Hourly, Fee-Only Financial Planning and our hourly fee planning page.
Frequently asked questions
What is the most common way financial advisors get paid?
Asset-based fees. Cerulli Associates reports that asset-based fees make up about 72.4% of advisor compensation, while commissions have fallen to about 23%.
How much does a financial advisor cost in the Denver area?
Pricing is set firm by firm, not by region. National data from Kitces Research shows the median asset-based fee is 1% of your portfolio per year (up to $1 million), compared with hourly rates of roughly $150–$400+ (median $300). On a $500,000 portfolio, 1% is $5,000 every year, while an hourly engagement is billed only for the time your questions take. Always ask for a total-dollar estimate.
What is the cheapest way to get financial advice?
It depends on your needs. If you have one or two specific questions and manage your own investments, hourly or project-based advice usually costs far less than an ongoing 1% fee.
Ready to talk? Schedule a free consultation with an Arvada-based, fee-only fiduciary.
Montgomery Financial Planning, LLC is a Registered Investment Adviser located and registered in the State of Colorado. Registration does not imply a certain level of skill or training. Industry figures are national medians from the cited third-party studies and are not Montgomery Financial Planning's fees. This article is for informational purposes only and does not constitute investment, legal, or tax advice.
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