Financial Adviser Fees Compared

Have you wondered how much your financial adviser's fees will cost you now and over the long term? How much difference do adviser fees make to your investment and your future? How do different financial advisers fees compare? We wondered the same thing and decided to find out.

With our financial adviser fee calculator, you can compare how much different financial advisers will eat into your investments.

Financial advisers can vary how they charge their fees, so let us consider the different ways adviser fees can be structured. A financial adviser may be using a combination of these fees.

  • Percentage of assets

    A percentage fee can bring a lot of money over time to the financial adviser and reduce your investment significantly. These percentage fees are often around 0.5% to 2% and are generally less the more assets you have.

    As our investment increases, so does that of the financial adviser. Some say this gives the adviser more incentive to spend time increasing your investment. It is also possible that the adviser can make more money spending time finding another client and getting another source of percentage fees.

    Some people like the convenience of the fees being taken out of your account without having to allocate funds from their own budget.

  • Fixed fees

    When a set one-time fee is charged for a service, for example, the creation of a financial plan. The fee will normally vary depending on the complexity of the investment and hopefully not on the equity size. The advice may also be more expensive if it is tailored to individual needs, rather than a more cookie cutter approach used to cater for many clients without as much work.

    We like to find out what the fee will be upfront, which makes it easier to budget for. There also needs to be a clear contract of what will be provided for that fee.

  • Hourly fees

    A fee that is based on the time taken for completion. Often used by fee for service financial advisers.

  • Commissions

    A commission fee may be charge on the value of an investment when it is bought (front-end load) or sold (back-end load).

    Some investment companies will also pay a commission to your financial adviser, which indirectly is possibly priced into the investment product in some other way. We try to find out as much about all the fees of an investment (sometimes these are hidden). Some financial advisers will even pay those commissions back to you, which can mean they are less likely purchasing that investment for their own benefit.

  • Performance fees

    Some financial advisers will take add additional fees when they make a positive return above a benchmark target.

    The premise of performance fees is this is an incentive for the adviser to work harder to get you a better return. Unfortunately they do may not give you back your money if they under perform. This so they could take more risks with your money to potentially net them higher profits leaving you to pay if the higher risks do not work out.

Fees Wish List

  • We want a financial adviser who is upfront about their fees and does not try to hide or avoid talking about them.
  • For governments to enforce transparency of fees so we can know what we are being charged.
  • To know what value and services are being provided for these fees. Will a full financial plan be created, what investment advice is provided, how and in what format. Higher fees might be worth more to us if we are getting more value from the financial adviser.
  • We want the financial adviser to be working for our best interests, not theirs.

Fees and Taxes

You may also find fees can be claimed as tax deductions or taken from pre-tax currency. We like to check out our entitlements to ensure we are not paying more than you we need to.

Performance comes, performance goes. Fees never falter.

Warren Buffet
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