New data from Adviser Ratings has revealed that over nine in 10 advisers plan to increase their fees in the new year.
While advisers have been overwhelmed with rising costs, compliance, insurance, and staffing expenses for several years, these have now been compounded by general inflation, Adviser Ratings noted.
Last year, the median advice fee increased by 8 per cent and since 2018, it has risen more than 40 per cent, Adviser Ratings data shows.
Moreover, the firm’s data revealed that the median advice fee stood at $2,510 in 2018, before rising to $2,800 in 2019, $3,256 in 2020, and $3,529 in 2021.
At the same time, the average amount of funds under advice per client has increased by 22 per cent between 2018 and 2021.
“Many practices say increasing fees in the new year is a necessity; that’s likely to have further affordability consequences for clients and would-be clients,” Adviser Ratings said.
Namely, with the profession’s numbers now below 16,000, there are fewer referral pathways for clients who have been orphaned by their advisers.
“While almost half of the businesses we’ve surveyed in the past year are looking to expand their client base, operating conditions and profitability pressures are making them more selective in the types of clients they target,” the firm noted.
Adviser Ratings acknowledged that the Quality of Advice Review has the potential to tackle this affordability issue, particularly the recommendations regarding the scrapping of statements of advice and simplifying disclosure requirements.
I agree with Dino. So you actually think putting up your fees in a looming recession is a good idea ? ?
The problem for the advice industries dwindling client numbers is information. For instance there’s plenty of accessible share trading info for investors. They can do ok & avoid the FUM fee. Increasing your advisor fees is not a very good business plan to lure clients back
Advice is a truckload more than share selection
how on earth do you run a business charging the average client $3,529??
Very successfully if you have the right offering and are efficient. Base it on an hourly average charge
Run an average business
Does this fee include mgmt fees for investments and/or insurance commissions???
They include industry fund fees for limited advice. Would look very different if only full scope holistic advice costs were included
Run a business in poverty or a one man band business model and never looking to expand to have any staff? I feel for the families in need of advice but becoming unaffordable.