How much does a Financial Advisor cost?

One of the first questions people think about when it comes to financial advice is ‘how much does a financial advisor cost?’ That’s usually followed by ‘is it worth it?’ I’ll help answer the first question in this article, and explain the different pricing options that advisors use.

So just how much does a financial advisor cost these days?

In short, the cost can range quite a lot depending on your circumstance. The average initial/upfront cost is around $3,500 (based on a survey by Adviser Ratings), with the average ongoing costs being $3,000-$4,000 per year. Many advisers will also have minimum costs or asset values to take on a client.

For those of you that want to delve deeper, we will go through the pricing methods that financial advisors use so you can get a bit of an idea of the costs for you. The cost of working with a financial advisor is usually based on:

• The types of services & advice being sought
• How simple or complex your situation is
• The type of fee structure that the advisor uses

Let’s go through these points in more detail!

Types of Financial Advice Services

The services that financial advisers offer generally fall into the below:

• Strategy Analysis & Scenario Comparisons – this is where an adviser will compare a number of different strategies & scenarios to help achieve your goals. This could be things like paying more off your home loan vs investing, whilst also factoring in holidays & having a family.
• Financial, Retirement & Investment Planning – sometimes called ‘financial product advice’, this is where the rubber hits the road. An advisor will compare & recommend the right investments, funds & accounts to achieve the outcome you desire.
• Investment Management: once your investments are up an running, many advisors offer the service to man age the investment, make sure it remains aligned with your goals & preferences, and course correct if things start to veer off.

Example: 
Emma, a young professional, sought advice on managing her superannuation. A few focused sessions provided her with a clear plan to maximize her contributions, costing her less than more comprehensive services. 

Are your finances simple or complex?

The complexity of your financial situation significantly impacts the cost of advice. 

• Simple Situations: If your finances are straightforward—think single income, minimal debt, and basic investments—you’ll likely pay less. Advisors can address your needs efficiently in less time than more complex scenarios. 

• Complex Situations: On the other hand, if you own multiple properties, run a business, or manage international investments, your advisor will need to dedicate more time and expertise, which increases costs. 

Example: 
James, a self-employed consultant with diverse income streams, needed help navigating tax obligations, super contributions, and an investment strategy. His advisor developed a customised plan, but the detailed analysis came with a higher price tag. 

Fee Structures

Advisors typically charge fees in one of three ways: 

Fixed Fees 

Fixed fees offer clarity, and can range from $3,000 to $15,000 annually. This model works well for those seeking a comprehensive financial plan with no surprises. 

Asset-Based Fees 

Under this structure, advisors charge a percentage of the assets they manage, usually 0.5% to 1% annually. This model aligns the advisor’s interests with your investment growth but can become expensive as your portfolio grows. 

Hourly Rates 

For clients needing targeted advice, hourly rates (usually between $220 to $550 per hour) provide flexibility. This is ideal for one-off consultations or addressing specific financial challenges. 

Example: 
Tom, a startup founder, opted for hourly advice when structuring his business assets. He received expert guidance without committing to ongoing fees. 

How to choose the right advisor

Finding the right financial advisor is as important as understanding the costs. Here are some tips: 

1. Check Qualifications and Experience 
   Make sure the advisor is at a minimum degree qualified, ideally with a Masters or is a Certified Financial Planner (CFP). 

2. Ask About Their Fee Structure 
   Make sure the advisor is transparent about their pricing. There are no right or wrong ways for an advisor to charge for their professional services, however you want to know everything that is involved, what it will cost you and when payments are required. 

3. Assess Compatibility 
   Your advisor should understand your goals and communicate in a way that resonates with you. You may end up working together for many years, so you want to gel & enjoy your time together. 

4. See what professional associations they are part of 
   The main association in Australia is the Financial Advice Association Australia (FAAA). Subscription to these associations show the adviser is at the forefront of the profession. 

Conclusion – How much does a Financial Advisor cost?

So in summary, how much does a financial advisor cost? Most advisors will charge $3,000-$5,000 for the initial advice, and a similar amount each year for ongoing advice. At New Era we do things a little differently – we have a monthly membership where most people pay between $149 & $199/mth out of pocket, and an initial Financial Blueprint plan for $1,400.

Hiring a financial advisor isn’t just about managing your money; it’s about building a secure future. Whether you’re navigating life’s milestones or optimising a complex portfolio, the right advice can deliver returns far beyond the initial cost. I believe everyone should have a financial plan, but not everyone necessarily needs a financial advisor. Use the information in this article to assess different ones and when you are ready choose the right advisor for you!

FAQs – How much does a Financial Advisor cost?