Is advice worth the cost?

If you’ve never received financial advice before, it’s understandable if you feel concerned about how much it might cost you. Like any other professional service – such as working with an accountant or a lawyer – the amount you pay your financial adviser will depend on how complex your needs are and how much time they spend with you.

While there is no set cost for financial advice, it may help to look at the average prices financial advice clients pay and what they get in return.

In 2019, the Financial Planning Association of Australia found that its members charged their advice clients an average of $2,671 to prepare a Statement of Advice and $3,757 per year for ongoing advice.¹

Keep in mind that this is an average and the cost may vary significantly depending on the adviser’s level of experience, your requirements, and the time and effort needed to set up and maintain your financial plan.

Another variable is the type of advice you receive. One-off advice about a particular issue (for example, setting up a pension account) will cost less than an ongoing, comprehensive advice relationship that looks after all your financial requirements – such as your super, investments and estate planning.

The best way to get an accurate idea about how much your advice will cost you is to speak to the adviser directly. They can provide you with a Financial Services Guide that outlines all their costs, so you can decide upfront if you’re comfortable with what they’re charging.

Some of the fees you pay to your financial adviser may be tax-deductible if they relate to an investment that provides you with assessable income. Your financial adviser or accountant can explain to you which fees may be tax-deductible, and which ones aren’t.

^{1Financial Planning Association of Australia, CoreData FPA Member Research, 2019}

It depends on what you need from your adviser and the advice arrangement you set up together.

As part of their service, an adviser can: 

• Review your financial situation, researching options and providing recommendations
• Help you develop your financial goals
• Set up your financial plan
• Recommend and implement investment, super or retirement strategies
• Monitor and make changes to your financial plan in line with market movements or changes in your life
• Make sure everything complies with current regulations. 

But that’s only half the story. There are also many intangible benefits that you can get from an ongoing advice relationship, an adviser can: 

• Increase your financial knowledge and confidence
• Decrease your financial stress, which can improve your quality of life
• Know if there is someone available to help you if something unexpected happens, or you run into financial difficulties.

While it’s hard to put a dollar value on these intangible benefits, they can make an enormous difference to how you live your life both now and into the future.

Find out what to expect from your adviser

Ultimately, you need to decide whether the benefits of receiving advice will outweigh the costs you’ll have to pay for that advice. Financial advice isn’t for everyone. If you’re confident making financial decisions, and you don’t have a lot of assets, then you may not need an ongoing relationship with an adviser. It might be better to look after things yourself, and perhaps get one-off advice if something big or unexpected happens in your life and you need some guidance.

On the other hand, if you feel like you don’t have a handle on your finances, you don’t know where to start, or you feel like you’re potentially missing out on opportunities, it might be a good idea for you to get in touch with a financial adviser. So if you’re not comfortable with where you’re at financially, it might be time to do something about it.