Financial advice costs
Paying for financial advice
ASIC receives complaints about the fees charged by financial
advisers. It's important to understand exactly how your adviser
will be paid before you engage them, and again before you agree to
any of their 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 are not happy with the fees you've been charged.
The first meeting with a
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 give you an idea of what they can do to help
The adviser will tell you how much the advice will cost 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.
Advisers charge fees based on the type of advice being provided,
for example advice around a single issue, such as choosing an
investment or consolidating your super, will cost less than
comprehensive advice that takes into account all of your personal
circumstances. See types of financial advice for
Statement of Advice (SOA) fee
If you decide to continue with the adviser, they will prepare a
Statement of Advice (SOA) that will
formally document the advice. This will include their understanding
of your current personal circumstances, your financial goals,
strategies to achieve your goals, and the 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
Did you know you can negotiate the fees you'll pay with your
The cost of the advice can vary significantly from one adviser
to the next and will depend on the scope of the advice and how the
adviser charges fees. Some advisers charge flat dollar fees
(also known as 'fee for service'), while others will charge fees
based on a percentage of your investments. You may be charged a
combination of these fees, for example your adviser may charge a
flat dollar fee for preparing an SOA but charge ongoing advice fees
based on a percentage of your investments.
If you receive advice about insurance, you may not have to pay
for the SOA if the adviser is paid commissions from the
Even if you decide not to proceed with the adviser's
recommendations, you will generally be expected to pay for the
preparation of the SOA.
implementing financial advice
If you decide to accept the adviser's recommendations, there may
be a fee for implementing the advice. This covers
the administration work. The amount charged should reflect the
complexity of the recommendations and the amount of work required
to implement the advice. You may be able to negotiate
this fee with your adviser.
You will usually be offered a choice of payment
options, which may include paying upfront or having the cost
deducted from your investment.
Never write cheques payable to your adviser if the money will be
used for investments. Make the cheque payable to the product
Ongoing financial advice
If you've agreed to receive ongoing advice, it's important
to understand what your ongoing advice fee will cover.
Services may include:
Regular reviews with your financial
It's important to understand the total amount of fees you will
pay - both up-front and on an ongoing basis, and who receives the
- Regular reports on your investment portfolio
- Phone or email access to your adviser or an associate
- Seminar invitations.
You may be offered different levels
of ongoing service which will determine the
ongoing fees you'll pay and the amount of contact you can have
with your adviser.
Some advisers charge flat dollar fees while others will charge a
percentage of your investments. If your adviser charges a
percentage-based fee, make sure you know what this will be in
dollar terms, as a percentage fee may look much smaller than the
actual dollar amount.
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.
Check you are getting what you pay for
ASIC has found some advisers charging for ongoing advice they
have not provided. If you have agreed to an ongoing
service, make sure you are getting
the advice you paid for. If you have paid fees for services you
haven't received, lodge a complaint through the adviser or
licensee's internal dispute resolution system as 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
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
Interviewer: And it's my understanding that's
nearly half of the overall market? It's about 40% of the overall
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
Interviewer: Is ASIC going to take any
enforcement action in relation to the conduct outlined in this
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
So that will take the total compensation to more than $176
Interviewer: Yes. And that's the estimate at
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 Financial Ombudsman Service
Interviewer: That's good advice Jo. Thank you
very much for your time.
Jo: It's a pleasure. Thank you.
report and the
media release relating to the report can both be found on
ASIC's website. Just go to asic.gov.au. There's also a link to the
relevant MoneySmart page there in the media release. So check
We'll be back with another episode very shortly. Thank you very
much for listening.
Advice review implementation fees
If, after a review of your financial plan, you and your adviser
agree to make changes to your investments, you may be charged
additional implementation fees.
Annual fee disclosure statements
If you've agreed to ongoing advice, you will receive an annual
fee disclosure statement that will outline 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.
You can end your ongoing relationship with your adviser at any
time. See working with a financial
adviser for more information.
See questions to ask a
financial adviser for talking points you can use to check the
cost of ongoing advice.
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, financial products bought before 1 July
2013 can still pay ongoing commissions to the adviser. The
commissions will continue to be deducted from your investment until
you leave that product or end your relationship with that
Your adviser can also still receive commissions on some new
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
If you're unsure how much you're paying, 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.
Remember, any fee you pay reduces the money you have
Case study: Edward asks to see all the fees
Edward goes to see 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 $1,500.
The adviser explains that there will also be investment
fees for the products that have been recommended. Edward agrees to
pay for the financial plan.
At the next meeting, Edward receives the plan which, along with
the strategic advice recommendation, outlines all the fees
payable if he implements the advice. The fees table in the SOA
summarises the fees for the first year, and who receives each
|Fees payable by Edward
||Fee charged ($)
||Fee as a percentage of investments
||Fees received by
|Financial plan fee
based on $400,000 in investments
|Ongoing advice fees
|Platform administration fees
|Investment management fees(1)
|Insurance premiums year 1 (100% commission to
|Total fees in Year 1
|Estimated ongoing investment fees and
(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
financial advice fees
If you're not happy with the fees you are paying your adviser,
talk it over with them and see if they are willing to renegotiate
their fees. If you're not happy with the adviser's response (or
they refuse to speak to you about your advice fees) you can make a
complaint through the adviser's complaints process.
See problems with a financial
adviser for more information about what to do if you're unhappy
with the service you've received from an adviser.
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.
Last updated: 14 May 2018