“Is a Financial Advisor Worth It?” Calculator - Tool
What this calculator is for
This calculator is a diagnostic. It quantifies the gap between a do-it-yourself path (and paying no advisory fees) and a with-advisor path (and paying advisory fees) under the same market assumption set. The goal is clarity: if an advisor’s expected return (after fees) is higher than a user’s DIY assumption, the tool shows potential value add; if not, it shows a drag.
Key Takeaways
- The tool runs two paths - DIY vs With advisor -using the user’s expected returns and fee model.
- It reports the annual net delta, cumulative value add, and value add as % of portfolio value, plus a simple signal based on those inputs.
- It supports % of AUM and flat $/year pricing, so users can test different fee structures.
- Results are purely arithmetic; they do not forecast future returns or recommend any approach.
Inputs - what each field means (and why it matters)
- Portfolio Value
The starting balance is analyzed. Larger portfolios magnify small percentage differences into real dollars over time. (So what? It helps prioritize where to negotiate fees or scope.) - DIY Expected Return (%/yr)
A user’s planning assumption for going it alone. It is not a forecast - just the baseline for comparison. - Advisor Expected Return (%/yr)
A planning assumption for what a user believes the gross return path could be with professional help (for example, from asset allocation, rebalancing discipline, or tax tactics). Studies have argued that disciplined coaching and planning can sometimes improve outcomes, but impacts vary widely.(Vanguard) - Advisor fee model
Toggle between % AUM and Fixed $/yr to reflect how the service is priced. The SEC encourages investors to understand how professionals are paid before hiring them. (Investor) - Advisor Fee (% AUM) or Fixed $/yr
Enter the actual terms from a proposal or agreement. Because fees compound, a seemingly small number can matter over multi-year horizons.(Investor) - Years
The evaluation horizon. Time is the amplifier. Longer horizons make differences more obvious.
A note on math shown below the button: the tool charts both paths using the selected returns and subtracts the fee from the advisor path each year (for flat fees, a fixed dollar; for AUM, a % of assets). It keeps market assumptions constant across scenarios to isolate fees and expected-return assumptions.
Outputs - how to read the results
- Net delta (per year)
The approximate annual difference at today’s portfolio size. It answers: “Right now, is the advisor's assumption a tailwind or a headwind?” - Value add over horizon
The cumulative dollar difference over the selected years. This is the headline number most users look for. - Value add (as % of PV)
Normalizes the gap to the starting portfolio value, useful for comparing scenarios. - Chart: Portfolio value over time
Two lines - DIY and With advisor - on the same scale. The gap between the lines is the modeled difference using the inputs.
What the calculator does not do
- It does not predict markets.
- It does not judge advisor quality.
- It does not include fund expense ratios or taxes. Those factors matter; they can be analyzed separately. Morningstar’s “Mind the Gap” study shows that investor behavior - buying high, selling low - also affects realized returns, which is sometimes where good coaching may help. (Contentstack)
How to get useful results in under two minutes
- Use the actual fee from the proposal (effective AUM% % or flat dollar).
- Keep a single planning return for DIY and a single planning return for the advisor path; avoid changing them mid-test.
- Run three quick scenarios: current fee, a lower fee, and a flat-fee alternative. The spread frames the negotiation.
- Re-run annually; as balances and goals change, so does the math.
This calculator is for educational purposes only and is based entirely on user-entered assumptions. It does not predict future returns, recommend any investment approach, or evaluate advisor quality. Return assumptions for both the DIY and advisor paths are hypothetical and may differ materially from actual results. The output is not tax advice, investment advice, or a solicitation to hire or fire a financial advisor. Investors should consider their personal circumstances and consult a qualified professional before making financial decisions.
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