Data from Adviser Ratings’ 2020 Financial Advice Benchmarking Study, which took in responses from around 1,500 advisers, revealed that median advice fees had risen to $3,256 in 2020.
This was up 16 per cent from the median advice fee of $2,800 in 2019, and up around 22 per cent from the median fee of $2,510 in 2018, according to the data.
Adviser Ratings said there were “multiple variables in play” when it came to the rising costs of advice.
“Other reasons for the higher fees, aside from rising costs and the shrinking supply of advisers, is because advisers are getting better at understanding their client value proposition and charging appropriately,” the group said.
“This includes specialising in certain areas of advice, only engaging clients that meet their brief, and being better at articulating the value they bring, especially where it involves the softer elements of coaching and managing client impulse control rather than the hard metrics of portfolio performance.”
The group expressed doubt over the effectiveness of ASIC’s inquiry into affordable advice at reducing fee levels, saying advice licensees were cautious around the idea of providing lower cost, mass-market services.
Among respondents to the Adviser Ratings study, less than 20 per cent had clients that received one-off advice.
“There does not appear to be a lot of appetite from advisers to make wholesale changes to their businesses to provide simple advice in greater scale, despite the community need,” Adviser Ratings said.
“Partly, that is simply two groups – government and regulators versus the industry – running at different speeds on the same agenda.
“But, for now, advisers (and their licensees) aren’t prepared to take the risks to deliver more advice more simply, and more simple advice. At least not until there is more legal certainty about the direction the government is heading and that ASIC will not retrospectively hold them to account.”
This article doesn’t provide nearly enough information. Define “advice fees”… Up front? Ongoing? What’s the median client look like that these relate to? Where can we see/buy a more comprehensive version of this data? A few paragraphs from what was likely a substantial document is unhelpful.
If the Govt and the Industry funds pulling the strings in the background,keep intervening with market forces,the client and adviser relationship ,which in realty has nothing whatsover to do with them then this advice industry is doomed..and will shrink to the size that the industry funds wont see as competition! The poor consumers land in their greedy clutches!
And if we move to annual fee renewals, as proposed in the Haynes No 2 Bill, the Bill Explanatory Memorandum says quite explicitly that costs on consumers will increase by $28 million to $34 million year after year. This totally flies in face of the Govt claiming that “we want fees in super to reduce”, when their own legislation is resulting in the exact opposite! The Haynes legislation is making it more expensive for consumers to get advice – which is exactly what the Union based super funds want.
We do annual fee renewals now and it costs no extra, but I guess thats because we see our clients at least annually anyway…..maybe this is catching all those who only see their clients every two years to get a bi-annnual opt-in signed….
If you’re charge $5,000 pa, rather than $500 pa, I suppose you would charge them annually
I am very surprised the rise is only 20%. An advice fee of circa $3,500 seems bizarrely low ? You could not possibly be compliant at that price level.
Advisers are generally nice people, who become friends with their clients. They are reluctant to increase fees, preferring to charge a higher cost to new clients rather than raise the fees on established clients. If the survey asked ‘what is the average fee charged for new clients?’ it would be a different story. Eventually the fees will go up for established clients as well. It just takes time.