Understanding Financial Advice Fees

What fees you should expect to see in your Statement of Advice

Types of Fees in Financial Advice

Your SOA should clearly itemise every fee you will pay. This includes the adviser fee (the cost of the advice itself), product fees (ongoing costs of recommended products), and any commissions or trail payments. Every fee must be disclosed in dollar amounts where possible.

Adviser Fees vs Product Fees

Adviser fees are what you pay for the advice. Product fees are what you pay for the products themselves (such as insurance premiums or superannuation administration fees). Your SOA should clearly separate these so you understand what you are paying for.

Ongoing Fee Arrangements

If your adviser charges an ongoing fee for continuous advice, this must be disclosed with a clear description of what services you will receive in return. You have the right to cancel ongoing fee arrangements at any time.

What Should Be Disclosed

Your SOA must disclose all fees, commissions, and any other benefits the adviser or their licensee receives. This includes volume bonuses, soft-dollar benefits, and any other remuneration that could influence the advice.

Types of Advice Fees

Initial advice fees (SOA fees) cover fact-finding, research, analysis, and document preparation. These range from $2,000-$6,000 depending on complexity. Ongoing fees cover annual reviews, monitoring, and ad hoc advice, typically $1,500-$4,000 per year or 0.5%-1% of assets.

Some advisers charge hourly rates for additional work outside the agreed scope. All fees should be agreed in advance and documented in your SOA or Ongoing Service Agreement.

Product Fees vs Advice Fees

Advice fees are what you pay your adviser. Product fees are what you pay the product provider (super fund, insurer, investment platform). Both affect your overall returns. Your SOA should clearly separate them.

Common product fees: super administration fees (0.5%-1.5% p.a.), investment management fees (0.3%-1% p.a.), insurance premiums, and platform fees. Understanding the total cost is essential for evaluating value.

Evaluating Fee Reasonableness

Consider: the complexity of your situation, the time and expertise required, the potential benefit, and industry benchmarks. ASIC research shows median comprehensive advice costs around $3,500 for initial advice, with ongoing fees typically ranging from $1,500 to $4,000 per year. Fees that are significantly above market rates without clear justification may warrant questioning.

Ask your adviser for a total cost projection over 1 year and 5 years, including all fees — both advice fees and product fees. Compare this total with the expected benefits of the advice. If the advice helps you achieve significantly better investment outcomes, save tax, or manage risk more effectively, the fees may be well worth paying. The Fee Disclosure Statement you receive annually is your best tool for monitoring whether costs are tracking as expected.

Questions to Ask About Your Advice Fees

Before agreeing to any fee arrangement, ask your adviser: What is the total cost of implementing these recommendations? Are there any ongoing fees? How are fees calculated — flat fee, hourly rate, or percentage of assets? What happens to prepaid fees if I terminate early? Are there indirect costs such as platform fees or investment management fees not included in your advice fee?

A transparent adviser will answer all questions clearly and provide a written fee breakdown. If an adviser is reluctant to discuss fees or gives vague answers, consider it a warning sign. The Corporations Act requires full fee disclosure in your SOA. Remember that fee disclosure statements must be provided annually for ongoing arrangements, giving you a regular opportunity to review whether the fees provide value.

Frequently Asked Questions

Are advice fees tax deductible?
Fees for advice relating to producing assessable income (e.g., investment advice) are generally deductible. Ask your tax adviser.

Can I negotiate fees?
Yes. Many advisers are willing to negotiate, particularly for ongoing arrangements or larger investments.

What if I cannot afford the fees?
Discuss your budget. The adviser may offer scaled advice at lower cost, a payment plan, or reduced scope.

Are there hidden fees?
All fees should be disclosed. Watch for: percentage-only descriptions (ask for dollar amounts), fees for services not agreed, automatic increases, and exit fees.

What Financial Advice Costs in Australia

Understanding typical advice fees helps you evaluate whether your adviser's charges are reasonable. Recent industry data provides clear benchmarks:

Fee Type	Typical Amount	Trend
Annual ongoing advice fee	$4,700 – $4,800 (median)	Up 67% over 5 years, but growth slowing to ~4%
Initial SOA / plan fee	$2,000 – $3,500	Varies by complexity
Hourly rate	$300 – $600 per hour	Higher for specialist advice
Funds under advice (FUA) fee	0.5% – 1.1% of balance	Average FUA: $758,000
Top 20% profitable practices	Nearly double median	Higher fees = leaner cost-to-serve models

Despite 68% of Australians seeing the benefit of professional financial advice, only 6% are willing to pay more than $2,500 for it. This gap between perceived value and willingness to pay is a key reason why regulatory reforms (DBFO, QAR) aim to reduce the cost of advice delivery.

If your adviser's fees are significantly above these benchmarks, ask for a clear breakdown of what you're receiving for the premium. Your SOA must disclose all fees and charges under FOFA requirements.

Sources: Adviser Ratings Australian Financial Advice Landscape 2025, Vanguard Adviser Best Practice Guide 2025, Investment Trends Adviser Business Model Report 2025.