My financial advisor overcharged me $15K over 10 years — how can I get my money back?

If you use a financial advisor, you will have to pay their fees, which can be calculated under several different frameworks.

It’s a relationship that requires a lot of trust, whether you’re hiring someone for advice, or managing your finances seriously.

However, what would happen if your trusted advisor accidentally overcharged? Will they just lend you the money you overpaid, or do they have to include interest? If so, how is it calculated?

Consider Jeff, who has worked with the same financial advisor for ten years, and has recently been alerted that his account has been overcharged for a 10-year advisory fee, estimated at $15,000.

Jeff isn’t sure that the company’s value for his consultant is providing a fair return, and he wonders if he should report the incident to regulators.

To check if you are being charged accurately, it is important to understand what type of rate structure the advisor uses.

If you work for a fee only, they do not accept commissions for their services (1). According to the National Association of Personal Financial Advisors, they can charge hourly, as a retainer, as a percentage of assets, or as a fixed rate. If their payment is based on a percentage of assets, this is known as “assets under management” (AUM).

Advisors using an AUM fee structure may have a minimum asset requirement for clients they work with (2). They may also use a tiered plan, where payments decrease as assets grow; for example 1% on a client’s first $500,000, and 0.5% of assets beyond that (2).

While it is easy to tell if an advisor is being overcharged if they use a fixed rate, hourly, or retainer structure; if they use AUM, you may not see any friction easily as the money is withdrawn directly from your investment account. In a CNBC report, Kathryn Berkenpas, director in charge of business development at the CFP Board, a non-profit organization that oversees the designation of a certified financial planner, said that this can sometimes mean that these funds “go under the radar (3).”

CNBC also notes that AUM is “the most common form of advisor compensation,” with nearly 72% of advisors using this fee structure in 2024, and 78% expected to do so in 2026, according to financial services consulting firm Cerulli Associates.

Read More: 5 important steps you can take once you’ve saved $50,000

Back to the situation involving Jeff. His advisor uses an AUM fee system, with a tiered structure based on account value — 1% on $500,000 and under, 0.75% on those between $500,000 and $1 million, and 0.5% on those over $1 million.

Initially, Jeff’s account was less than $500,000, but it has since grown to over $1 million in the 10 years since he opened it. According to his adviser, he was mistakenly charged 1% for every 10 years. Those mistakes added up to about $15,000 in overpayments.

In addition to a refund of the nearly $15,000 he unknowingly paid, Jeff will also receive back interest, calculated using the Department of Labor’s Table of Underpayment Rates.

Unfortunately, situations like Jeff’s do happen. According to a risk warning issued by the SEC Division of Examinations in 2021, an analysis of 130 SEC-registered advisors found measurement errors, including overcharging and inaccurate calculation of combined fees (4).

Although the advisor’s use of the Department of Labor’s Payment Rates Table to calculate the interest owed is probably above board, if Jeff was concerned about his actions, he could contact the SEC or the Financial Industry Regulatory Authority for advice, or file a complaint.

To protect yourself from overpaying, you can request a quarterly or annual statement detailing what you have been charged. Also, make sure you fully understand the advisor’s fee structure.

If your advisor can’t or won’t explain the cost breakdown in plain language, or if they refuse to provide a report detailing what you paid, this is a red flag in terms of their professionalism and reliability.

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NAPFA (1); Alden (2); CNBC (3); SEC (4)

This article provides information only and should not be construed as advice. Offered without warranty of any kind.