While the median advice fee was just $2,510 in 2018, mounting operational costs and a growing recognition of the value of financial advice have driven up the cost of advice over the last seven years.
However, Adviser Ratings found that the rate of increase has slowed considerably, as the last 12 months saw fees rise just 4 per cent to $4,744 per year, while recent years have seen jumps as much as 16 per cent.
“The shift in perceived value clients receive from financial advice is reflected in the fee data, with practices increasingly confident in pricing their services to reflect their true worth,” Adviser Ratings said.
With the consumer price index (CPI) sitting at 2.8 per cent in 2024, the firm suggested that practices may be reluctant to increase more than a nominal CPI rise.
Meanwhile, advice practices have also begun shifting to client-centric fee models, allowing them to calculate fees based on client satisfaction, retention and growth by aligning fees with the value advisers deliver to their clients.
“This approach fosters trust and transparency and ensures that fees are commensurate with the benefits clients receive,” the firm said.
While the data shows that 68 per cent of Australians see the benefit of professional financial advice, according to the 2024 Australian Financial Advice Landscape report, just 6 per cent are willing to pay more than $2,500.
In order to meet prospective clients in the middle, Adviser Ratings found that practices have started to employ tiered service models, allowing clients to access different levels of service at corresponding price points, while others are leveraging technology to improve service efficiency and cut costs.
Taking a different approach, some firms are simply engaging in clear articulation of their value proposition and fee structures or enhanced transparency in fee disclosure and collection methods to provide clarity on the value of their services, Adviser Ratings said..
However, as the latest round of industry reforms come into play, the firm added that practices might consider re-evaluating fee structures and collection methods, balancing new regulations with innovative fee models.
“As advice practices are emerging at the top of the financial services value chain, both financially and from a public good perspective, the evolution in fee structures and collection methods is a crucial part of this transformation, supporting practice sustainability and broader access to professional financial advice,” Adviser Ratings said.
They will have to rise as csolr increases massively and is purely funded by advisers. Disgusting Labor and Treasury should all be sacked. Ex Dixon’s and westpac fees for no service to dead people lawyers running asic. Burn it all and start again with practices responsible for self regulating. Until then it’s just further down the toilet that is Australian financial services backward ignorant selfish regulation and choking red tape from the bloated compliance economy.