How financial advisors make money

A percent of assets: the client pays a yearly fee that's a share of the money the advisor manages for them, often billed each quarter. LPL Financial, which serves independent advisors, says its own advisory platform charged about 1% in 2025. At Edward Jones, a firm with 20,425 financial advisors, fees tied to the value of clients' money (advisory fees, plus fees from fund companies and on cash) made up 79% of revenue.

A flat fee: the client pays a set price for a financial plan and advice, by the year, by the plan or by the hour, whatever their accounts hold. The BLS, the government's labor statistics agency, says advisors at planning firms and self-employed advisors charge a flat fee or earn commissions.

Commissions: the advisor is paid when a client buys an investment, like a mutual fund with a sales charge, plus a small yearly trail while the client keeps it. Many advisors mix two or all three, and the rules make them tell clients in writing how they're paid.

A percent of assets is worked out on what the accounts are worth. LPL says its advisory fees are mostly billed each quarter in advance, on the account values at the end of the quarter before. So when markets rise, the next bill is bigger, and when they fall, it's smaller.

Markets move a lot. In 2025 the main index of big US companies' shares rose 17.9%; in 2022 it fell 19%. Most clients' accounts also hold bonds and cash, so they move less than the index, but they move the same way.

That's the trade at the heart of the business. A percent of assets gives an advisor a raise in good years without any new clients, and a pay cut in bad years with the same work. A flat fee stays the same either way. Commissions depend on clients buying, and LPL warns that falling markets can mean fewer new investments.

Some mutual funds take a sales charge when a client buys, and part of it goes to the firm that sold the fund. The Growth Fund of America, run by Capital Group, takes up to 5.75% on its Class A shares, less on bigger purchases: on a purchase in the fifty-thousand to hundred-thousand dollar step, the charge is 4.5% and the selling firm gets 3.75%. The advisor's firm then pays the advisor their share.

Funds can also pay the seller a small yearly service fee, the trail, for as long as the client keeps the fund: up to 0.25% a year at this fund. At LPL, trails brought in $1.9B of its $4.5B in commissions in 2025.

FINRA, which oversees the firms that sell funds, caps a fund's sales charge at no more than 8.5% (less for a fund that also pays a yearly service fee) and the yearly service fee at 0.25%.

Personal financial advisors who work for a firm earned a median of $105,070/year in May 2025, by the BLS's count, with commissions and production bonuses included. The range is wide: the lowest tenth earned under $50,190/year, the top tenth over $357,020/year.

Personal financial advisors held 299,400 jobs in 2025. The BLS expects their number to grow only 1% from 2025 to 2035, but projects about 17,100 openings a year on average, as advisors retire or leave. Only 10% of the jobs were held by self-employed workers.

Many advisors start at a firm and later go out on their own, often working through a big firm's platform for trading, records and compliance. LPL, with 32,178 advisors, says independent advisors typically keep 80–100% of their fees and commissions, against 30–50% at firms where advisors are employees. On average, LPL paid out 87.44% in 2025.

Keeping more of the fee means paying more of the costs: the office, staff, software, compliance help and liability insurance all come before the owner's own pay. And the first fees arrive only after clients' accounts have moved and the first bill has gone out, so a new practice needs a cushion for its first months.

Each client signs an advisory contract. States write rules for what it must say: in Washington, for one, the fee and how it's worked out, what's refunded if the contract ends, and that the adviser won't pass the contract to another firm without the client's consent. Who an advisor registers with, and the duty to put clients first, are the next steps. The free lesson lets you plan your own practice's first year.