What does a financial planning adviser charge?
What is the cost of financial advice?
Are you thinking about seeing a financial adviser? Here’s how much it could cost you.
Whether you’re looking to strengthen your financial position post-pandemic or want to achieve goals such as home ownership, a financial adviser could help you create a plan to get there.
However, for many Australians, one of the big barriers to getting financial advice is the cost.
In 2019, ASIC research found that 41% of Australians intended to get financial advice in the future. Despite this, 35% of respondents said one reason they did not or might not get advice was because they thought it was too expensive.
The cost of seeing a financial planner can range from $3,000-5,500 to set up a plan, and then about $3,000 -5,500 annually if you have an ongoing relationship with the planner.
It really does come down to the complexity of your situation.
Median advice fees have gone up more than 20 per cent over the last two years, as the cost of doing business increases.
Data from Adviser Ratings’ 2020 Financial Advice Benchmarking Study, which took in responses from around 1,500 advisers, revealed that median advice fees had risen to $3,256 in 2020.
This was up 16 per cent from the median advice fee of $2,800 in 2019, and up around 22 per cent from the median fee of $2,510 in 2018, according to the data.
Adviser Ratings said there were “multiple variables in play” when it came to the rising costs of advice.
“Other reasons for the higher fees, aside from rising costs and the shrinking supply of advisers, is because advisers are getting better at understanding their client value proposition and charging appropriately,” the group said.
“This includes specialising in certain areas of advice, only engaging clients that meet their brief, and being better at articulating the value they bring, especially where it involves the softer elements of coaching and managing client impulse control rather than the hard metrics of portfolio performance.”
Among respondents to the Adviser Ratings study, less than 20 per cent had clients that received one-off advice.
“There does not appear to be a lot of appetite from advisers to make wholesale changes to their businesses to provide simple advice in greater scale, despite the community need,” Adviser Ratings said.
“Partly, that is simply two groups – government and regulators versus the industry – running at different speeds on the same agenda.
“But, for now, advisers aren’t prepared to take the risks to deliver more advice more simply, and more simple advice. At least not until there is more legal certainty about the direction the government is heading and that ASIC will not retrospectively hold them to account.”
The cost is what you pay; the value is what you get…
Our discovery meeting is a chance for us to learn about each other.
It’s where we will explore whether we can help you and talk about ways we could work together.
This one-hour meeting serves three main functions.
1. Our team will get crystal clear on your financial goals, needs, and concerns as well as learn about your current financial situation.
2. You will get a clear understanding of who we are, our process, and our approach.
We will walk through the Financial Plan process that all new clients of Newcastle Advisors go through so you understand exactly what’s involved in hiring our team to complete your Financial Plan at the meeting’s conclusion.
3. Most importantly…We will find out if we actually like, trust, and want to spend more time together!
At this point, If we all agree to start your Financial Plan, we will sign the necessary paperwork and you will pay the first half of the planning fee to officially start building your financial roadmap.
At the end of our initial meeting, we will have an understanding of your situation and be able to articulate the scope of work, the timeframe the work will take and the associated fees.
However, without completing an in-depth analysis and research, sometimes it is difficult to articulate the tangible value you will receive.
When considering your personal situation, generally there are a plethora of strategies & investments that need to be explored to ensure the blueprint we provide increases the probability of you achieving your goals & becoming financially free, whilst overlaying this with taxation, liquidity, flexibility and accessibility.
What is the value of advice
A small number of our new clients question what they get for their money.
Initially, we see new clients focus on the tangible aspects - like super or investment fee savings, savings on tax & investment performance.
However, over time it's actually the intangible that is valued more by our clients. The certainty that comes from having a clear plan & confidence in becoming financially free.
It's the peace of mind that comes from living without financial worry, without wondering if you should be doing something more, something better to manage your wealth. That is the real value.
Again, the value of advice is personal, just as advice is personal. What you place value on or why you sought the advice of a financial planner, will be completely different to your friend or family members.
What price do you put on someone putting in place a plan that:
supports you on getting to the next level and becoming financial free
allows you to retire on your terms
helps implement a debt repayment strategy to repay your mortgage sooner
saves you over thousands each year in superannuation fees
helps minimise your capital gains tax liability
ensures you do not pay tax on your retirement savings in retirement
ensures your beneficiaries are not slugged with an inheritance tax upon you passing
monitor your investments and ensure you continue to make informed decisions
stop you from making financial mistakes
provide invaluable aged care advice for you & your loved ones
protect you & your family in the event of injury, illness or death.
Then there are other factors to be considered:
Skill? Service level? How many people touch your data file?
The scope of work included (or more importantly the scope of work not included), how quickly the work is done, whether deadlines are being met, whether the lead financial planner is your contact or have you been passed onto someone else, how comfortable you are in asking them questions, the accuracy of the work – I mean the list truly goes on and on.
Who is giving you advice?
We have had many clients come to us, stating that the financial planner they signed up with is no longer servicing them and providing value.
They have been passed off to a junior financial planner or an admin assistant overseas.
Furthermore, we also had someone come to us for a second opinion after seeking advice from their business coach.
This client had hired a business coach and pays them $1,200 an hour for their advice.
This business coach said that they were paying too much tax and need to buy an investment property on the Gold Coast.
Who has access to your information?
Recently we spoke to a potential client who were was not happy that they were paying $7,700 per annum and were passed around different overseas administration staff. They spoke to 6 different administration staff, looking to get their financial plan implemented 6 months after it being presented.
The client then received this email…
Please find enclosed the SOA fee invoice for $7,700; our record shows that the invoice is outstanding as at today.
There was back and forth, about the contract that was signed, the client believing the work had not been done, so they were not paying for the service, and were still waiting for a reply to emails and phone calls a month ago.
The principal adviser then jumped back in to the emails to say…
As for the invoice, it’s actually due as per the terms of the Statement of Advice or when it is presented and Authority to Proceed is signed off.
I Would appreciate if this could be paid when you have a chance as we are undertaking a very thorough process and would be great to get it all wrapped up soon.
Yet 6 people from business had access to the file, nobody knew the job inside out as everyone had their fingers in the pie, the delivery of the advice was a “dogs breakfast”.
The client finally went back to the principal financial adviser:
To tell you the truth, we are totally disappointed in your whole business & what we have had to deal with!
Your financial plan has only been delivered after my constant reminders to all your staff and the mistakes have been unbelievable!
Another follow up from hearing nothing from you and you deliver this to me.
That is not on when were you going to tell us that!
It’s just not good enough! You have been paid way too much for what we have received. There will be no more payments!
Expensive yes, value NO.
A recent example we had was a couple who have 2 kids and are currently renting in Adamstown.
With cash at bank earning next to nothing in interest, they are looking at investing $200,000 for the next few years, as with work & family overseas, they are not sure where they will be living in the next few years and do not want to purchase property and be tied to a large debt at the moment.
The financial planner they went to see were going to charge $7,700 for a financial plan that included investing in 3 managed funds.
The financial planner also wanted to move their super funds and charge an ongoing fee to manage their super - after the client stated they did not want to receive advice on superannuation.
Again, this left a bad taste in the clients mouth. Expensive yes, value NO.
So are you getting value from your financial planner?
That question can only be answered by you in conjunction with your financial planner.
Understand what they are doing, understand what work is being done, understand what the expectations are, understand their qualifications, understand their skills, understand what work you are required to do, understand the health of your financial situation and understand if you have foundations that need to be set up before you can consider the sexy investments.
“Your financial plan should be able to
propel you forward, help in decision making & achieve your financial goals.”
If you are not getting value from your financial planner don’t be afraid to ask questions.
If you are scared, embarrassed or don’t want to look silly – then you probably don’t have the right financial planner on your team, and it may be time to seek a second opinion.
What are our fees?
Initial Advice Fees
These are paid when you have agreed to receive our advice.
Our charges range from $4,400 for simple advice and up to $13,200 for strategic financial planning advice.
$1,100 is generally paid upfront, with the remainder paid at the time of the advice presentation. Should you proceed or not, the advice fee is still payable as the value and work has still been provided.
We have a small number of clients, whom opt to engage us on an hourly rate. Our hourly rate will be subject to a minimum fee of $550 per hour.
Generally we find at the higher-end of the scale being those people looking to establish self managed super funds and invest in properties.
Due to the sheer amount of time, compliance and associated risks to our licence and business, the fees are generally at the higher end of the scale.
All fees are inclusive of GST.
These prices should be used as a guide only.
We will discuss your individual needs and agree our costs with you. The final cost will be based on the complexity and extent of services we agree to provide you. These fees will also be provided within your SoA.
Generally our initial advice takes anywhere from 25-35 hours for a standard complexity plan.
Ongoing Advice Services
We offer ongoing advice services as part of our client value proposition. Our ongoing advice service fees are indexed to CPI and listed below inclusive of GST.
The range consists of;
• Gold: Grow and maintain your financial plan. The cost of this service ranges from $3,300 to $6,600 p.a (Inc GST). Ongoing advice service fees indexed to CPI.
• Platinum: Suited to more complex financial planning & SMSF investment strategy. The cost of this service ranges from $6,600 to $12,000 p.a (Inc GST). Ongoing advice service fees indexed to CPI.
Please note: At your annual review, if there are any further advice requirements that need to be documented, your financial advisor will provide a quote for you to approve prior to proceeding.
Your tailored ongoing service package will be discussed and agreed with you based on your individual needs and goals. The cost of these services will be provided and explained to you in detail by your Financial Advisor and detailed in your initial SoA.
A customer asked how much it would cost.
Me: $4,400.
Customer: That seems expensive.
Me: How much do you think it will cost?
Customer: $400 maximum.
Me: For $400 I invite you to do it yourself.
Customer: But I don't know how to.
Me: For $400 I'll show you how, so besides saving $4,000, you'll get the knowledge for the next time. But to get started, you need some equipment.
Customer: But I don't have that equipment.
Me: Well then for another $400 I'll rent my equipment to you so you can do it. But remember, to do your job yourself, you also have to pay for the non-productive factors, like insurance, tax, etc.
Customer: But this is going to cost me even more.
Customer: Hmmm. I've been thinking. I'd rather pay you the $4,400. If I had to do the job myself, it wouldn't be perfect, and it would cost me a lot more.
Don't forget, when you pay for a job, you also pay for:
- Knowledge
- Experience
- Study
- Tools
- Services
- Time
- Accountability
- Professionalism
Only by knowing all the elements necessary for the production of a certain work can you estimate the actual cost.
We love growing with people, by partnering with them to work out the strategies and investments that will support them in getting to the next level.
We love people who are:
Seeking objective advice
Willing to be coached
Willing to take advice
Will to pay for advice
If this sounds like you, feel free to get in touch with our team and arrange a time to discuss your situation.