How much does a financial adviser cost?

How much are financial adviser fees?

At the time of writing, the median cost of yearly financial advisor fees in Australia is $3,960, according to Adviser Rating’s 2024 Australian Financial Advice Landscape Report. This includes the cost of both limited advice and comprehensive ongoing advice. For comprehensive ongoing advice only, the cost is likely to be higher. This median figure is up 58% from five years ago, which the report attributes to inflationary and interest rate pressures, alongside advisers needing to dedicate more time to ensuring documentation meets compliance requirements.

Financial advisor fees can also vary depending on factors such as:

• The type of advice you want

• The complexity of your financial situation

• The fee method the adviser uses.

Financial advisors can help in a range of scenarios, from assisting you in buying a house to planning for your retirement, and the more comprehensive the advice you require, the more expensive the cost will likely be.

How do financial advisers charge fees?

There are two main fee methods: fixed fees and percentage-based fees.

Fixed fees

Financial advisers most commonly charge fixed fees. This involves charging a set price for a particular service. For example, a fixed fee to:

• Prepare a statement of advice

• Implement financial advice

• Give ongoing financial advice.

“Some will charge depending on your situation and what areas of advice you want to engage them on,” Sarah Abood, CEO of the Financial Planning Association of Australia (FPA), told Canstar.

“Some are comprehensive financial planners so they will do an overall plan for you upfront and then implement it a bit at a time.”

Some advisers may charge a fixed fee per hour, although this is not as common.

Percentage-based fees

The other type of fee structure is percentage-based fees. This includes:

• Asset-based fees based on a percentage of the total value of assets in your portfolio. For example, this could be an annual fee of 1% of your assets.

• Investment management fees based on the performance of your investments—usually measured by an agreed benchmark.

Commissions

Financial advisers are banned from charging commissions on most new investment products (including superannuation and ordinary investments). Advisers can still receive commissions on life insurance, but it’s capped at 60% of the premium upfront in the first year of the policy, and 20% ongoing each year after that according to the Australian Securities & Investments Commission (ASIC).

When it comes to price, Ms Abood says there’s nothing wrong with shopping around and meeting with a few different planners.

“Most planners will do a free first interview because they too want to know that the rapport is there and that it is the right fit,” she said.

“You’ve got to really feel comfortable with someone who is your financial planner because you obviously tell them a lot of pretty sensitive information.”

Are financial planning fees tax-deductible in Australia?

Yes, you can generally claim a tax deduction on some financial advisor fees. However, this is provided the costs are related to advice which leads to or is directly associated with a specific investment which produces assessable income (e.g. dividends from an investment).

The Australian Taxation Office (ATO) has indicated that the following fees are not tax-deductible:

• Initial advice on a proposed investment (there may be exceptions)

• Advice on investing additional funds to grow your existing investment portfolio

• Advice on taking out life, Total and Permanent Disability (TPD) or trauma insurance

• Advice relating to your household budget

• Advice where fees are paid from your superannuation fund.

Refer to the ATO and/or speak to your tax agent to find out about what financial advisor fees you can and can’t claim on your tax.

How can I find a financial adviser?

A good starting point can be to speak to your friends and family who have engaged the services of a financial adviser and hear about their experiences.

You can also search for a financial adviser through professional organisations such as the Financial Advice Association Australia (FAAA) and the Profession of Independent Financial Advisers (if you’re looking for an adviser who has been classified as independent).

It’s important to check that any adviser you’re considering is registered with ASIC and has a current licence, as well as the appropriate qualifications.

How else can I get financial advice?

If seeing a professional financial adviser is not affordable for you at the moment, here are some other options to consider.

Your super fund

Super funds can offer a cost-effective way to get advice from a qualified professional. Most of the large super funds have some kind of advice offering, Ms Abood said.

“Advice will be limited to your super and to matters that relate to your retirement,” Ms Abood said. “But that said, it can still cover some good ground for people and give them a good starting point.”

If you get simple, general advice relating to your super account, it may be covered by the fees you already pay to the fund. If you get more comprehensive and personal advice, there may be a separate fee. You may be able to pay for this directly out of your own pocket or pay for it through your investments or super.

The Federal Government is also trying to increase accessibility to simple retirement advice provided by super funds. Some stakeholders, however, have concerns about the quality of said advice, as well as how much it will cost.

Compare Super Funds

Robo-advisers

With the rise of AI, some digital platforms now offer robo-advisers. These online advisors offer automated advice, typically regarding investments. You usually take an assessment to determine your risk appetite and based on this you will be recommended an investment strategy. While this is cheaper than seeing a financial adviser, there can be limitations.

“You might get one that helps you buy stocks or rebalances an ETF portfolio and that is good as far as it goes,” Ms Abood said.

“But it is difficult to find a robo-adviser that can give you holistic advice where you can put in all your information and get the best advice for your situation.”

Generative AI tools, like ChatGPT and Perplexity, may claim to offer advice, but it’s best to proceed with caution. These tools are still prone to giving incorrect information, so you should take what they say with a grain of salt.

If you need help managing your money in general, there are also a number of budgeting tools that can connect to your bank account and help you classify your spending.

Take care with finfluencers

In recent years, investing and finance influencers (called ‘finfluencers’) have grown in popularity, especially on social media platforms like Instagram and TikTok. Ms Abood suggests that finfluencers could be helpful for general financial literacy, but acknowledges there are risks, particularly when they promote unregulated products like cryptocurrency.

Most finfluencers are not licensed to give financial advice, shown recently by 18 social media finfluencers’ being issued ASIC warning notices due to allegedly promoting high-risk financial products unlawfully and providing unlicensed financial advice to Australians. If you choose to follow their advice and something goes wrong, there are no protections, Ms Abood warned.

If you’re in doubt about someone’s qualifications, you can look up Moneysmart’s financial advisers register to see whether they’re qualified to give financial advice.

Financial counselling

If you’re under financial stress, you may want to speak to a financial counsellor rather than a planner. Financial counsellors are professionals in counselling and debt crisis management and offer free, confidential and independent advice. You can speak to a financial counsellor by calling the National Debt Helpline on 1800 007 007 or by visiting their website.