Financial advice costs

Paying for financial advice

It's important to understand how your adviser will be paid before you engage them, and before you agree to implement any recommendations.

Here we outline some of the fees you may be charged when getting financial advice, your payment options and what to do if you're not happy with the fees you've been charged.

The first meeting with a financial adviser

The first meeting with an adviser is often free. During this meeting, you and the adviser will discuss your advice needs and the adviser can explain how they can help you.

The adviser will also explain how they charge and give you an estimate the cost of the advice so you can decide whether you want to proceed. Costs should be outlined in dollars, not just as a percentage of the amount you have to invest.

Smart tip

Did you know you can negotiate the fees you'll pay your adviser?

Simple advice on a single issue, such as choosing an investment or consolidating your super, should cost less than comprehensive advice that takes into account your goals and personal circumstances. See types of financial advice for more information.

Advice costs can vary significantly from one adviser to the next. Some advisers charge flat dollar fees (also known as 'fee for service'), while others charge fees based on a percentage of your investments. Some charge a combination of both, for example an adviser may charge a flat dollar fee for preparing a Statement of Advice (SOA) but ongoing advice fees based on a percentage of your investments.

Statement of Advice (SOA) fee

If you decide to continue working with the adviser, they will prepare an SOA that will formally document their advice. It will include their understanding of your current personal circumstances and financial goals, recommended strategies to achieve your goals, and details of any financial products they recommend.

The cost for preparing the SOA will be billed to you or may be deducted, with your permission, from the balance of your investment.

If you receive advice about insurance, you may not have to pay for the SOA if the adviser receives commissions from the insurance company.

If you decide not to proceed with the adviser's recommendations, you will generally still be expected to pay for the preparation of the SOA.

Fee for implementing financial advice

If you decide to accept the adviser's recommendations, there may be a fee to cover the administration work involved with implementing the advice. The amount charged should reflect the complexity of the recommendations and the amount of work required. You may be able to negotiate this fee with your adviser.

You may be offered a choice of paying upfront or having the cost deducted from your investment.

Important: Never write cheques payable to your adviser

Never write cheques payable to your adviser if the money will be used for investments. Make the cheque payable to the product provider instead.

Ongoing financial advice fees

If you've agreed to receive ongoing advice, it's important to understand what your ongoing advice fee covers.

Services may include:

  • regular reviews with your financial adviser
  • regular reports on your investment portfolio
  • phone or email access to your adviser or an associate
  • newsletters and seminar invitations.

The adviser may offer different levels of ongoing service which will determine the ongoing cost and the amount of contact you can have with your adviser.

If your adviser charges a percentage-based fee, make sure you know what this is - in dollar terms - as a percentage fee may look much smaller than the actual dollar amount.

Annual fee disclosure statements

If you've agreed to ongoing advice, you will receive an annual fee disclosure statement that outlines the fees you paid, the services you received, and the services you were entitled to receive for the previous 12 months.

Consider whether you have benefitted from the ongoing service and are happy to continue for the next 12 months. If you are paying ongoing advice fees for services you don't want, you can negotiate the ongoing fee or ask for the fees to be switched off.

Renewing your ongoing advice arrangement

As well as an annual fee disclosure statement, your adviser must also give you a renewal notice for the ongoing fee arrangement every 2 years. If you receive a renewal notice and do nothing, your adviser must assume that you do not want to receive ongoing advice and must stop charging you ongoing advice fees.

You can end your ongoing relationship with your adviser at any time by notifying them in writing. Make sure you give them a reasonable amount of time to action your request and keep a copy for your records.

Advice review implementation fees

If, after a review of your financial plan, you and your adviser agree to make changes to your investments, you will be given a Record of Advice (ROA). You may also be charged additional implementation fees.

Important: Getting the advice you paid for

ASIC has found a large number of advice clients have been charged for ongoing advice they did not receive. If you are paying for ongoing advice that you haven't received, lodge a complaint through the licensee's internal dispute resolution system. You may be entitled to a refund and compensation.

See  ASIC's media release for more information.

Podcast on financial advice fees

Listen to Senior Executive Leader, Joanna Bird, talk about how ASIC is addressing advisers' systemic failures to provide ongoing advice services to customers who paid fees for those services. 


Interviewer: Hello and welcome to ASIC View, the official podcast of the Australian Securities and Investments Commission. On today's episode we'll be discussing ASIC's report into the extent of failure to deliver ongoing advice services to financial advice customers who are paying fees to receive those services. My name is Andrew Williams and with me this time around is Jo Bird, Senior Executive Leader, Financial Advisers at ASIC. Jo, thank you very much for your time.

Jo: Thanks Andrew, good to be with you.

Interviewer: Can you tell us more about the kind of fees we're talking about here? Why are customers paying these fees in the first place?

Jo: Basically the customers are paying fees to receive an ongoing advice service such as an annual financial advice review. However, they're not receiving the service. There are basically two reasons why they don't receive the service.

The first is they don't actually have a financial adviser allocated to them, because for example, their financial adviser has left the licensee or has retired. But they're still being charged the fee for the ongoing advice, which they're not receiving.

The second situation is where the customer does have a financial adviser allocated to them, but that adviser doesn't provide the advice they've agreed to provide, even though the fees are being taken out of, for example, the customers investment accounts.

Interviewer: Are there particular organisations that the advisers covered in this report are associated with?

Jo: This report is part of our Wealth Management Operations project, so we're focusing on the conduct of six of Australia's largest banking and financial services institutions. So we're looking at AMP, ANZ, Commonwealth Bank of Australia, Macquarie Group, National Australia Bank and Westpac.

Interviewer: And it's my understanding that's nearly half of the overall market? It's about 40% of the overall market.

Jo: Those institutions account for about 40% of the advice market.

Interviewer: So what led to ASIC looking into this issue in the first place and producing this report? And what did you find?  

Jo: Okay. We started this project as a result of information we obtained including through breach notification from some of the licensees. That information suggested to us that this conduct of charging fees and not providing any services was occurring. AMP, ANZ, CBA and NAB have all identified systemic issues in relation to the charging of ongoing advice fees and failure to provide those services for the fees.

Westpac has also identified a systemic issue, but in relation to one adviser only. Macquarie hasn't actually identified any systemic failures of the fee for no service variety. That isn't really surprising to us actually because Macquarie has quite a different business model to the other institutions.

So in the course of the project, well we've discovered that the problem exists and we've successfully negotiated a range of positive and improved compensation outcomes for the affected customers. We've said to the institutions, you have to make sure you fully compensate all these customers for these breaches.

And, we've made sure that the institutions have correctly identified the customers who have been affected by the breaches. We're making sure that the way they're calculating their compensation is fair. We're also insisting that they go in there and do some further reviews to make sure that they don't have these problems elsewhere, that they haven't identified.

Furthermore, we're actually asking them to make changes to their businesses to make sure that these failures don't occur in the future.

Interviewer: Is ASIC going to take any enforcement action in relation to the conduct outlined in this report?

Jo: ASIC has commenced several enforcement investigations in relation to this conduct. But regardless of those investigations, we think it's really important that the licensees compensate affected customers and make changes to their businesses to make sure that these problems don't occur again in the future and the report we've just published is about that part of our work.

Interviewer: Now you mentioned the importance of compensation here, can you talk a little bit about what the compensation process so far has entailed and what we can expect to happen in the future?

Jo: Certainly. So, as of 31 August 2016, the compensation arising from the failures outlined in our report was approximately $23.6 million. And that's been paid, or agreed to be paid, to 27,000 customers also. We expect the amount of compensation to substantially increase in the coming months. We have asked all of the institutions to give us the estimates of how much compensation they expect to pay for those breaches that they have already identified. And they have estimated that they will be paying $154 million plus interest extra to over 175,000 further clients.

So that will take the total compensation to more than $176 million.

Interviewer: Yes. And that's the estimate at this point?

Jo: Yes. I should add, obviously the earlier figure I gave you, the $23.6 million, is money that's clear and that money's been paid or about to be paid. The future figures of $154 million plus interest is an estimate.

Interviewer: And the amount of compensation that each individual customer gets will differ depending on the kind of fees that they've been paying in the first place? So it's not a uniform average?

Jo: That's right. It differs for each customer depending on how much they've paid and how long they were in an ongoing fee arrangement for.

Interviewer: Speaking of those customers, if anyone is currently paying for financial advice, or maybe they're thinking about paying for financial advice in the future, what advice do you have for people that are going into this industry and maybe looked at this report and had concerns?

Jo: Okay. My first tip would be to go to ASIC's MoneySmart website. That's a really useful resource for people who want to get financial advice. It gives them some guidance about how much financial advice might cost, and it really explains the advice process. My second piece of advice would be that customers should always check that they're receiving the services that they're paying for.

Fortunately, in the advice space, the Future of Financial Advice (FoFA) reforms have made it much easier for customers to check that they are getting the advice they're paying for. Every year a customer who is in an ongoing advice relationship should receive a fee disclosure statement that will set out exactly what they're paying and what service they're getting for what they're paying. And then every 2 years they will have to actively opt-in to the continuation of that ongoing fee arrangement.

The last point I'll make was that actually if you feel like you might have paid fees for services in the past that you didn't receive, you might be entitled to refunds and compensation. And you should, in the first point, lodge a complaint through the bank or the licensees internal dispute resolution system. And if you don't get satisfaction there, you should go to the Australian Financial Complaints Authority (AFCA).

Interviewer: That's good advice Jo. Thank you very much for your time.

Jo: It's a pleasure. Thank you.

Interviewer: The  report and the  media release relating to the report can both be found on ASIC's website. Just go to

We'll be back with another episode very shortly. Thank you very much for listening. 

Financial product commissions

Commissions and volume-based payments for recommending financial products can influence the advice given by financial advisers.

Commissions were banned on new investments and super products from 1 July 2013; however, the adviser can still receive ongoing commissions from financial products bought before that date. The commissions will continue to be deducted from your investment until you leave that product or end your relationship with that adviser.

Your adviser can also still receive commissions on some products, for example, life insurance. Information about commissions does not have to be included in your fee disclosure statement.

How to find out if you're paying commissions 

Ask your adviser to explain the products you have bought and whether they are receiving commissions. If commissions are being deducted from your investments and you're not happy with this arrangement, speak to your adviser about your options.

You may be able to switch to a product that doesn't pay commissions, or arrange for the commissions to be rebated to you. Any fee you pay reduces the money you have to invest.

Case study: Edward asks to see all the fees

Older Guy With PapersEdward visits a financial adviser. His investments, including super, total around $400,000. After taking the time to understand what Edward wants to acheive, the adviser offers to put together a financial plan for $3,500 with a further implementation fee of $1,500. The adviser explains that there will also be investment fees for the products they have recommended. Edward agrees to pay for the financial plan.

At the next meeting, Edward receives the plan which, along with the strategic advice recommendation, outlines all the fees payable if he implements the advice. The fees table in the SOA summarises the fees for the first year, and who receives each fee:

Fees payable by Edward Fee charged ($) Fee as a percentage of investments Fees received by
Financial planner Investment platform Product issuers
Upfront fees
Financial plan fee $3,500 - $3,500 - -
Implementation fee $1,500 - $1,500  - -
Ongoing fees based on $400,000 in investments
Ongoing advice fees $2,000 0.50% $2,000 - -
Platform administration fees $3,000 0.75%   $3,000  
Investment management fees(1) $3,000 0.75% - - $3,000
Insurance premiums
Insurance premiums year 1 (100% commission to adviser) $1,000 - $1,000 - -
Total fees in Year 1 $14,000 - $8,000 $3,000 $3,000
Estimated ongoing investment fees and insurance premiums $9.000 2% $2,000 $3,000 $4,000

(1)  Investment management fees are usually deducted from investment returns before they are credited to your account which means investment returns quoted are usually net of investment management fees.

Edward now understands that the total fees for the first year are $14,000.

An adviser must be remunerated for their services; however, it's in your best interest to know how much and how often you will pay for the advice you receive.

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Last updated: 03 Dec 2018