Guide to financial adviser fees

If you want to get financial advice, you will have to pay for it. But there are several ways you can be charged and fees will depend on both your specific needs and an individual firm’s prices.

How you may be charged

A financial adviser can charge you in several different ways. 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 particular piece of work – this could be several hundred or several thousand pounds.
  • A fee that you have to pay every month – 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.

Some advisers may 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. It’s also 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 or vice versa).

Your adviser must give you a copy of their charging structure before providing any services to you, and should also provide you with, or at least give a good indication of, the amount you will actually need to pay before you agree with them to proceed.

Fees v 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 – then advisers can still be paid commission.

Either way you are paying for the advice as if you buy a product that pays commission to the adviser, you will pay for this through higher product charges.

Initial consultation

Many financial advisers will offer an initial meeting free of charge. This isn’t designed to give you specific advice about your situation; rather it’s a chance to ask the adviser how they work, how much they charge and to get a sense of whether or not you feel you can work together and feel comfortable with them.

Read more in Key questions to ask your financial adviser.

How you may be able to pay

You may be asked to pay for the advice upfront or to pay part of the fee upfront and the rest when the work has been finished. If you are buying an investment you may be able to have the fee deducted from the investment rather than paying it as a separate amount.

What’s included in the price

Before you agree to use a financial adviser, ask the adviser to tell you exactly what you’ll get for the fee or charge. Make sure they confirm this in writing.

What can affect a financial adviser’s charges

The fees that financial advisers charge may vary widely. 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 an 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.