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Financial advice costs

Pay the right price for the right financial advice

Page reading time: 4 minutes

Financial advice fees vary depending on the financial adviser and the type of advice you want. Once you have an idea of the costs, you can decide whether paying for financial advice is right for you.

When you first meet with a financial adviser, they should give you a copy of their Financial Services Guide. This explains their fees, the services they offer and how they deal with complaints. This guide is a good way to compare fees between different advisers and negotiate a better deal.

How fees are charged

The way financial advisers charge can influence the advice they give you.

For example, if they get a commission for selling a financial product, like insurance, they may push this product. But if they charge based on how your investment performs, they may work harder to grow your money.

If you're eligible to access your super early because of COVID-19, financial advisers can provide a simpler Record of Advice. The advice fee, if any, is capped at $300.

Fixed fees

Percentage-based fees

If your adviser charges a percentage-based fee, ask what this fee is in dollars. The percentage may seem much lower than the dollar amount.

Commissions

A commission is an amount earned by an adviser for selling specific products. The commission is a percentage of what you pay for the product.

Your adviser can’t charge a commission on superannuation products sold after July 2013. They can still charge a commission on other products you buy, like life insurance.

Insurance commissions

Instead of an up-front fee for an insurance policy, an adviser may offer to charge you a commission. If you choose a commission, then you'll pay a higher premium for the life of your policy.

You can reduce the commission by asking to pay a higher up-front fee to your adviser. This also reduces your premium.

Check your fees

If you're paying an ongoing fee for advice, then you should receive a fee disclosure statement (FDS) every 12 months. This shows the fees you've paid.

Use this statement to check:

Generally you have to opt-in to an ongoing fee for advice arrangement every 2 years. Ask your adviser how often you have to opt-in and when they will remind you. 

If you don't pay an ongoing fee for advice, ask your adviser for an annual statement. Ask about any commissions they have received from your products and portfolio.

Never pay cheques and or make online transfers for investments to your adviser. Send the money to the product provider.

If you're unhappy with the fees or advice from your financial adviser, the first step is to talk to them. If you're not satisfied with their response, you can make a complaint.

Man standing with hand on hip looking happy.

Rhett asks to see all the fees

Rhett has around $400,000 to invest, including super.

After his first meeting with a financial adviser, Rhett agrees to get a financial plan. The adviser charges $3,500 for the plan, plus a $1,500 implementation fee. There will also be investment fees for the products they are recommending.

At the next meeting, Rhett receives the Statement of Advice (SOA). This outlines all the fees (and who receives each fee) for the first year if he agrees to go ahead.

From this statement, Rhett can see that the total fees for the first year are $13,660.

Fees Rhett has to pay

Fee for service ($)

Fees as a percentage of investments

Fees for financial adviser

Fees for investment platform

Fees for product issuer

Up-front fees

         

Financial plan fee

$3,500

-

$3,500

-

-

Implementation fee

$1,500

-

$1,500

-

-

Ongoing fees based on $400,000 in investments

         

Ongoing advice fees

$2,000

0.50%

$2,000

-

-

Platform administration fees

$3,000

0.75%

-

$3,000

-

Investment management fees(1)

$3,000

0.75%

-

-

$3,000

Insurance premiums

         

Insurance commission (66% of first year premium, including GST)

$1000

-

$660

-

$340

Total fees in year 1

$13,660

-

$7,660

$3,000

$3,340

Estimated ongoing investment fees and insurance premiums

$8,000

2%

$2,000

$3,000

$4,000(2)

(1) Investment management fees are usually deducted from investment returns before they are credited to your account.

(2) Includes full yearly insurance premium.

Note: Fees shown are indicative amounts only and will vary. Fees are also likely to be higher if you need a broader scope of advice.