Hiring a financial advisor typically costs about $3,500, depending on the type and complexity of work needed. That’s no small amount, but the right advisor can provide great value, so it’s important to understand your options.
In this article, we’ll break down the different fee structures and key factors to consider when choosing a financial advisor.
What Are The Different Types of Financial advisor Fees?
There are a few different ways financial advisors charge, each with its own factors to consider.
Asset based
Asset-based fees are less common today but are still used by some financial advisors. This fee structure charges a percentage of the total assets under management (typically 0.5%–2%). The idea is that it pushes advisors to grow your portfolio since their earnings increase as your assets grow. However, in some cases, advisors may receive high fees without actively growing the assets or providing value.
Hourly
Hourly billing is not a common pricing model for financial advisors. The main drawback is that the complexity of financial advice can vary, making costs unpredictable. Clients may end up overpaying or facing unexpected fees based on the time required to complete the work.
Commission Based Fees
Financial advisors no longer earn their income through commissions on investment products due to changes implemented after the Royal Commission. However, they can still receive commissions on insurance products while also charging fees for their services.
Flat Fees
Flat fees provide a straightforward and transparent way to pay for financial advice. Instead of charging based on assets under management or earning commissions from financial products, advisors charge a fixed fee based on the complexity of the service provided.
At Coleman Wealth, we believe flat fees are the fairest payment structure. This approach ensures clients know exactly what they’re paying upfront, with no hidden costs or conflicts of interest. Fees are based on the work required, rather than the size of your portfolio or the products recommended, allowing for truly personalised financial advice.
Coleman Wealth’s Fees
What To Be Aware of When Hiring a Financial advisor
There are a variety of factors you should consider when selecting a financial planner beyond the types of fee structure, this will involve you assessing the person, as well as doing additional research.
The Expertise
What kind of expertise does the advisor have? Do they specialise in a particular area, such as Centrelink financial advice, or navigating the financial aspects of divorce, or do they offer general financial planning services? Understanding their experience and knowledge in your specific financial needs is key to ensuring they can provide the best guidance.
Do they understand you?
You should be able to gauge this from your initial conversation: Do they understand you? Are they actively listening and asking follow-up questions to clarify the important details?
This is one of the most important aspects to consider, as everyone’s financial situation and needs are unique. It’s essential to choose an advisor who takes the time to understand your specific circumstances.
Check their credibility
It’s also important to verify an advisor’s credibility before making any commitments. A great way to assess their qualifications is by checking the Financial advisor Register, where you can review their education, experience, and any disciplinary history. Sharon Goodwin, our Senior Financial advisor has a master’s degree, whereas many financial planners don’t have this qualification, so it’s crucial to evaluate their expertise beyond just titles.
Additionally, client feedback can offer valuable insights—reviews and recommendations help gauge an advisor’s reputation. For example, Coleman Wealth has over 30 five-star reviews on Google, showcasing our trusted reputation and the satisfaction of our clients. Always take the time to research an advisor’s background and client feedback to ensure you're working with someone credible and reliable.
How To Get The Best Value
Above all, doing your research and knowing the right questions to ask will help you get the best value from a financial planner. Being honest and maintaining open communication throughout the process ensures that both you and the advisor understand your needs and expectations, allowing you to maximise the value of the services provided.
How Financial Planning Services Affect The Price
The type of services you require plays a significant role in determining the price of financial planning. Whether you're using a fixed fee or hourly model, the complexity and scope of the services will impact the overall cost. Below are some key factors that influence pricing:
Retirement Planning
Retirement planning is a crucial stage in anyone's life, and seeking financial advice during this time is essential. Several factors can influence the fees of a retirement financial advisor, such as estate planning, asset management, and income management (like pensions).
While these services can affect the overall cost, they should not deter you. Proper retirement planning is vital to ensure you make the right financial decisions for your future.
Investment Management
Investment management will affect the fees as well. Not all individuals will have investments, and the amount and diversification of investments will also affect the pricing.
Centrelink Advice
Centrelink advice is crucial for individuals navigating the complexities of government benefits and entitlements, especially as they approach retirement or face significant life changes. A financial advisor specialising in Centrelink can help you understand your eligibility for pensions, allowances, and other support programs, and can guide you through strategies to maximise your entitlements. Proper advice ensures you make informed decisions about your financial future, avoiding common pitfalls and potential penalties.
Inheritance
When you inherit assets, it’s important to understand the financial implications. Inheritance advice helps you manage the wealth you receive, whether it’s property, investments, or cash.
A financial advisor can guide you through the process of integrating your inheritance into your overall financial plan, ensuring that tax obligations are met and that you make the most of the assets. They can also help you decide whether to keep, sell, or invest inherited assets, tailoring the approach to your long-term goals.
SMSF
Self-Managed Super Funds (SMSFs) offer more control over your retirement savings, but managing an SMSF requires a deep understanding of compliance, investment strategies, and tax laws. Financial advisors specialising in SMSFs can help you navigate the complexities of running your own fund, ensuring that it meets all regulatory requirements and aligns with your retirement goals. With the right guidance, SMSFs can be a powerful tool for growing your wealth and securing your financial future.
Multiple Properties
Managing a variety of properties can be a great way to build wealth, but it comes with its own set of complexities.
Having a financial planner means you can be guided on how to structure your investments, assess the potential for growth, and help you balance your property assets with other investment options. Proper advice ensures you optimise the financial benefits of owning multiple properties while minimising risks and tax liabilities.