My financial advisor overcharged me $15,000 over 10 years. How can I get my money back?

If you use a financial advisor, you will have to pay their fees, which could be calculated according to several different structures.

It’s a relationship that requires a lot of trust, whether you hire someone to advise you or to actively manage your investments.

However, what if your trusted advisor accidentally overcharged you? Should they simply owe you the amount you overpaid or do they have to include interest? If so, how is it calculated?

Imagine Jeff, who has been working with the same financial advisor for a decade and was recently alerted that his account had been overcharged for advisory fees over 10 years, to the tune of almost $15,000.

Jeff isn’t sure the amount his advisor works for offers a fair reward and wonders if he should report the incident to a regulator.

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

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

Advisors who use an AUM fee structure may have a minimum asset requirement for the clients they work with (2). They may also employ a tiered system, where fees decrease as assets grow; for example, 1% on a client’s first $500,000 and 0.5% for assets above that amount (2).

While it’s easier to tell if an advisor has overcharged you when using a flat, hourly, or retainer fee structure; If they use AUM, you may not notice any discrepancies as easily since the fee is withdrawn directly from your investment account. In a CNBC report, Kathryn Berkenpas, managing director of corporate growth at the CFP Board, a nonprofit that oversees the certified financial planner designation, said this can sometimes mean these fees “fly under the radar (3).”

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

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Let’s go back to the scenario involving Jeff. Your advisor uses an AUM fee plan, with a tiered structure depending on account value: 1% for $500,000 or less, 0.75% for those between $500,000 and $1 million, and 0.5% for those over $1 million.

At first, Jeff’s account was less than $500,000, but it has since grown to more than $1 million in the 10 years since he opened it. However, according to his advisor, he was mistakenly charged a 1% fee for the entire 10 years. Those errors added up to about $15,000 in overpayments.

In addition to being reimbursed for the nearly $15,000 he unknowingly paid, Jeff will also be reimbursed for interest, which is calculated using the Department of Labor’s Underpayment Rate Table.

Unfortunately, situations like Jeff’s happen. According to a risk alert issued by the SEC Examinations Division in 2021, an analysis of 130 SEC-registered advisors found fee errors, including overbilling and inaccurate calculations of tiered fees (4).

While the advisor’s use of the Department of Labor’s Underpayment Rate Table to calculate interest owed is likely legitimate, if Jeff were 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 paying excessive fees, you can request a quarterly or annual report that breaks down what you have been charged. Also, make sure you fully understand the advisor’s fee structure.

If your advisor is unable or unwilling to explain the cost breakdown in plain language, or refuses to provide a report detailing what you paid, this is a red flag in terms of their professionalism and trustworthiness.

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

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