How Much Does a Financial Adviser cost?

15^th February 2023

If you’re looking to secure your financial future and achieve your financial goals, you may consider using a financial adviser. But, before you take the plunge, you must consider one crucial factor – the cost. In this article, we’ll explore the cost of hiring a financial adviser in the UK and the various factors that influence the fees.

The first step to understanding the cost of a financial adviser is to know the different types of financial advisers. In the UK, there are two types of financial advisers – Independent Financial Advisers (IFAs) and Restricted Financial Advisers.

Independent Financial Advisers: IFAs are professionals who offer unbiased financial advice across a range of products and providers. They have access to the whole market and are not tied to any specific product provider.

Restricted Financial Advisers: on the other hand, are professionals who offer advice on a limited range of products and providers. They may be tied to specific product providers, and as a result, their advice may not be as impartial as that of an IFA.

Initial fees for independent advice are cheaper than restricted advice, according to Financial Conduct Authority (FCA) data (Financial Advice Market Review Baseline Report, June 2017), which raises the question why would you pay more for a more limited service?

Other factors impacting the cost of advise include:

1. Expertise and Experience: The level of expertise and experience of the financial adviser can influence the cost. Financial advisers with a wealth of experience and a proven track record typically charge a higher fee.
2. Services Offered: The cost of a financial adviser also depends on the services offered. Some financial advisers offer a comprehensive range of services, including investment advice, tax planning, estate planning, and retirement planning. Others may offer only basic financial advice.
3. Location: The location of the financial adviser can also influence the cost. Financial advisers based in London and other major cities typically charge higher fees compared to those based in smaller towns and rural areas.

The cost of advice can vary greatly depending on the factors mentioned above however, according to the FCA, the average cost is 2.4% of the amount invested for the initial advice and 0.8% per annum for ongoing advice.

We offer a complimentary initial consultation to discuss your financial situation in greater detail and assess if our financial advice would be of benefit to you. There’s no cost to you, and no pressure to continue beyond this meeting. It’s simply a chance for us to understand your needs and see if we’re the right fit for each other.

Following this, we operate a tier-based charging structure, so the higher the amount being invested, the lower the fee is as a percentage.

Below is a fee calculator where you can see what our charges would be (for retirement advice we base the fee on the amount to be invested after any tax-free cash has been taken):

No. Prior to 2012, financial advisers were often paid through commission, leading some people to believe that their services were free. However, since commission on investment products was banned in 2012, all financial advisers now charge a fee for their services.

In general, yes. The results of several studies indicate that individuals who seek financial advice tend to be better off in the long run compared to those who don’t.

If you are considering relatively straightforward cash products such as savings accounts or Cash ISAs, it may not be necessary to pay for financial advice, especially with so much information readily available online.

Consulting with a financial adviser is almost a necessity when it comes to accessing your pension. The decisions you make when accessing your pension will have a lasting impact not only on the rest of your life, but also on any funds you may want to leave behind for your family. With the increasing complexity of this area, seeking the expertise of a financial adviser can be vital. They can provide expert advice and guidance on which provider and investment funds to use and also offer practical tips on maximising your retirement income while minimising tax liabilities.

Related Articles:
How to choose a financial adviser

Is my money safe with a financial adviser?

Financial adviser vs. financial planner – is there a difference?

Is financial advice worth it?

This information is based on our current understanding and is subject to change without notice. This article is for general information only and does not constitute advice.  Whilst information is considered to be true and correct at the date of publication, changes in circumstances, regulation and legislation after the time of publication may impact on the accuracy of the article.

The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested.

HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.

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