Guide to financial adviser fees

Wondering how much financial advisers charge? It depends on a number of things, including your specific needs and the firm you decide to hire.

How much does a financial adviser charge?

Many financial advisers offer an initial meeting free of charge. This isn’t designed to give you specific advice about your situation. It’s a chance to see how they work, how much they charge and to get a sense of whether you feel comfortable with them.

A financial adviser’s fees vary depending on what they are charging you for and how you pay.

Some advisers offer different ways that you can pay for advice. If there is a particular option you prefer, ask the adviser as they may be happy to negotiate. These include:

  • An hourly rate. This will vary from £75 an hour to £350, although the UK average rate is about £150 an hour.
  • A set fee for a piece of work. This could be several hundred or several thousand pounds.
  • A monthly fee. This could be a flat fee or a percentage of the money you want to invest.
  • An ongoing fee. An adviser can only charge you an ongoing fee in return for providing an ongoing service, unless you are paying off an initial charge over time through a regular payment product.

Make sure it works for you

It’s a good idea to find out whether you can choose different ways of paying for different services.

For example, paying an hourly rate for advice about your pension, but a percentage for advice about your investments. Try to find a system that suits you.

Your adviser must give you a copy of their charging structure before providing any services to you. They should also tell you how much the service you need will cost, or at least give you an estimate.

What can affect a financial adviser’s fees

The fees that financial advisers charge vary. There are several factors that could affect how much an adviser charges:

  • Location. Some advisers may be based in a more expensive part of the UK, which means their office costs will be much higher.
  • How the service is delivered. Some firms now offer advice by phone or even online, which can mean the cost of the advice is cheaper as they have lower overheads. However, if you are receiving advice this way, make sure that it comes with a recommendation that is specific to you so you are fully protected.
  • Who does the work. Some financial advice firms will use a highly-qualified adviser for all the work whereas another firm may use support staff to do some of the work (signed off by an adviser) which will cost you less.
  • How well qualified a financial adviser is. The more qualifications and experience an adviser has, the higher their fees may be. Depending on the type of advice you’re looking for, you may feel that paying for an adviser who is highly qualified is worthwhile.
  • How complex your situation is. If there is a lot of sorting out to do, this can take time and time is money. You can help by being very clear about the type of advice you need and having your papers in good order. Any sorting out you can do in your own time you won’t have to pay for. Only use your adviser to do the things that you can’t do yourself and to provide the expert advice.

Financial adviser fees vs commission

Since 2013 advisers cannot be paid a commission if they give you advice about pensions, investments or retirement income products such as annuities. Instead they must charge you a fee for the advice.

However, if you are getting advice on mortgages, equity release, general insurance (like travel or home insurance) or protection insurance, such as term life insurance, advisers can still be paid commission.

At the end of the day, in both cases you are effectively paying for advice. Either by paying a fee, or by purchasing a costlier product that gives the financial adviser commission.

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