Wondering how much it would cost to get regulated financial advice? The amount you pay will depend on a number of things, including your specific needs, the type of advice you need and the firm you decide to hire.
How much does a financial adviser charge?
Many financial advisers offer an initial meeting free of charge. This isn’t designed to give you specific advice about your situation. It’s a chance to see how they work, how much they charge and to get a sense of whether you feel comfortable with them.
A financial adviser’s fees vary depending on several factors, including what they are charging you for and how you pay.
Some advisers offer different ways that you can pay for advice.
If there’s a particular option you prefer, ask the adviser as they might be happy to negotiate. 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 piece of work — this might be several hundred or several thousand pounds. This will be dictated largely by the complexity of the work and the time it takes (i.e. a pension transfer will cost more in advice fees than simply arranging an ISA).
- A monthly fee — this might 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’re paying off an initial charge over time through a regular payment product.
Advisers will often use more than one type of charge. For example, there might be a fixed set-up fee and then an ongoing charge based on percentage of assets. It’s also important to remember that the advice fees won't include the cost of the underlying investments. Many advice firms also use services such as investment platforms, the costs of which are sometimes passed onto the customer.
Make sure it works for you
It’s 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.
Try to find a system that suits you. Most advisers will offer an introductory consultation for free, so that you can ask questions about the service and make sure you want to work together before going any further.
Your adviser must give you a copy of their charging structure before providing any services to you. While this will help give you an idea of the likely costs, it won’t tell you exactly how much you can expect to pay.
It’s important to make sure they tell you how much the service you need will cost, or at least give you an estimate.
Read more in our guide Key questions to ask your financial adviser
What can affect a financial adviser’s fees?
The fees that financial advisers charge vary.
There are several factors that could affect how much an adviser charges:
- Location — some advisers might 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 typically cheaper as they have lower overheads. But if you’re receiving advice this way, make sure that it comes with a recommendation that’s specific to you so that you’re fully protected.
- The type of advice service — some advisers are classified as restricted, which means they might either be restricted in the type of products they offer, or the number of providers they choose from, or both. Others are classed as independent, meaning they can recommend all types of retail investment products and pension products from firms across the market without restriction. Their status might have some impact on the amount they charge.
- Who does the work — some financial advice firms will use a highly-qualified adviser for all the work, whereas others might use support staff to do some of the work (signed off by an adviser), which may cost you less.
- How well qualified a financial adviser is — the more qualifications and experience an adviser has, the higher their fees might be. Depending on the type of advice you’re looking for, you might feel that paying for an adviser who is highly qualified is worthwhile.
- How complex your situation is — if there’s 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.
- The approach the firm takes — for example, a firm that mainly uses low-cost ‘passive’ investments and/or outsources investment management to specialists might charge less than one that manages the investments in-house.
For more on different types of advisers, see our guide Choosing a financial adviser
Help with paying for financial advice
If you’re not sure if you can manage the full cost of professional advice, there might be a way to make it more manageable.
For example:
- The pensions advice allowance — this allows people in defined contribution (DC) pension schemes to withdraw up to £500 tax free from their pension pot to pay for retirement advice. The £500 allowance is per tax year, but you can do it for up to three separate tax years. Check that your pension provider will let you use the allowance though, as not all of them do.
- Employer support — while companies aren’t allowed to offer financial advice to employees, some offer access to advice as part of their employee benefits packages, sometimes at a reduced cost.
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Financial adviser fees vs commission
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.
But if you’re getting advice on: mortgages, equity release, general insurance (like travel or home insurance) or protection insurance, such as life insurance, advisers can still be paid commission.
At the end of the day, in both cases you are effectively paying for advice, either by paying a fee, or by purchasing a product that gives the financial adviser commission.
Help with the cost of living
Worrying about money because of rising rents, high energy bills or debt? If so, we’re here to help.
Take the first steps to find your way forward with our guides to help you with the cost of living.
