Advice fee rises on the horizon

8 December 2022
| By Laura Dew |
image
image
expand image

Over 90% of advisers say they plan to increase their fees next year, according to Adviser Ratings.

This was the result of rising costs related to compliance, insurance and staffing expenses as well as the wider inflation rise which is expected to peak at 8%.

Median advice fees had risen 8% since last year and had risen 40% since 2018.

Data from the firm’s Adviser Landscape Report showed the median advice fee was $3,529, rising to a maximum of $12,000 in 2021. This was up from a median of $2,510 in 2018.

Just 7% of respondents said they expected to keep their fees at their current rate.

This need to increase fees was also making firms more selective on the clients they worked with in order to remain profitable. The average fund under administration per client was now $785k, up from $643k in 2018.

However, earlier research from the company found most consumers felt advice was already unaffordable and three-in-five would only pay up to $500 to see an adviser.

This figure was still $300 higher than the minimum advice fee in 2021 which was $800.

Only one-in-20 would pay between $2,500 and $5,000, a figure more reflective of current fee pricing.

Read more about:

AUTHOR

Submitted by Observer on Fri, 2022-12-09 17:45

Genuine question: Are advisers increasing their fees just because they can or because they have to?
According to the well-publicised KPMG study that was commissioned by the FSC, comprehensive advice costs $5335 per client and takes 23.9 hours on average to produce.
According to ASIC report 627 most people are after superannuation and retirement advice (not comprehensive advice) - and most people do not have complex arrangements.
There is no way in the world it should be taking 24 hours to produce this type of advice - even with all the compliance steps we need to abide by.
Retirement advice for everyday people (most people) should take about 10 to 18 hours tops (depending on whether its for singles or a couple).
The figures that keep getting thrown around do not make much sense, especially as financial advice technology has improved in recent times.
It should still be possible to run a profitable business charging $2,000 - $3,000 per client - especially for advisers with no office overheads.
I get the feeling that too many advisers are charging what they can get away with.
Just my opinion.

Sounds like your opinion is gained from a chair in an Ivory Tower. Combine your opinion with that of ASIC, FSC, and KPMG - and the result is - more opinions and very likely not one single experience meeting and providing personal advice to a retail client under BID?
Ivory Tower seems accurate IMO.

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 1 week ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 2 weeks ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 2 weeks ago

A Sydney-based financial adviser has been banned from providing financial services in the interest of consumer protection after failing to act on conduct concerns. ...

3 weeks 6 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

1 day 13 hours ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

3 weeks 4 days ago