Financial adviser fees

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.

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.