Independent financial adviser fees - how much does advice cost?

First published 25 October 2017 • Updated 19 December 2019

Your first question about financial advice may be, ‘What can it do for me?’ The second is probably, ‘How much will it cost?’

Advice fees can be anything from around £500 for investment advice to £5,000 or more for some kinds of pension advice. The exact amount that advisers charge depends on what kind of help you need - but good advice should always cost less than no advice at all.

Note that independent financial advisers are not paid by commission. If financial advice appears to be free, then you are not dealing with an independent adviser but a salesperson.

Need a quick estimate? Try the Unbiased Cost of Advice calculator

The quickest way to estimate a specific financial advice fee is to use our free Cost of Advice tool. Read on to find out more about average fees and how these are worked out.

Types of financial adviser fees

Your financial adviser may offer you a number of different ways to pay them, depending on the services you require and the time period involved. Here are the kind of charging structure you may come across, ranked from most common to least common.

1.      Fixed fee
The adviser will perform a specific service (such as setting up an annuity) for a set price agreed in advance. You should ask for written confirmation of what is included in the fee.

2.      Percentage of assets
An adviser who is managing your investment portfolio over a period of time may charge a percentage of the portfolio’s total value, rather than a fixed fee. In this way the fee grows as the portfolio grows.

3.      Hourly rate
Some advisers may charge an hourly rate for certain services (£150 per hour is the UK average). This can be a useful charging structure for small, quick jobs such as moving investments on your behalf. However, you should make sure the adviser gives you an estimate of how long the work is likely to take.

You should discuss methods of paying (as well as the fees themselves) in your first meeting with a financial adviser, so you know exactly how your relationship will work.

How much do independent financial advisers charge?

Your adviser’s fees may be based on a number of things: the extent of the advice you need, how much time it will take, and the size of the assets involved. Broadly, advisers often charge between 1 and 2 per cent of the asset in question (e.g. a pension pot), with the lower percentages being charged for larger assets (percentage charges on smaller assets may be higher).

Every adviser is different, but all should be happy to discuss their fees up front. Here are some average fees1 for typical adviser services.

Advice and set up of £10,000 investment ISA

£300

Advice on a £300 a month pension contribution

£500

Advice on defined benefit pension transfer (based on a transfer value of £100,000)

£2,500

At-retirement advice on £250,000 pension pot

£3,000

Consolidating pension pots with a total value of £500,000

£5,000

Remember, the whole point of taking advice is to be financially better off in the long term. So for most people who take advice, the cost is less than the cost of doing nothing.

A note about IFA pension transfer fees

If you want to transfer a defined benefit pension into a pension pot, then by law you will need to seek professional advice if the transfer value is £30,000 or over. The fee your IFA will charge for the transfer reflects not just the advice and the work they do for you, but also the risk involved. Since you are exchanging a guaranteed benefit for a non-guaranteed type of pension, it is important to take this decision with great care.

Financial adviser ongoing fees

Sometimes you will want to hire an independent financial adviser on an ongoing basis, perhaps to manage your portfolio of investments. When you do this you will agree an ongoing fee in advance, which may be a percentage of the assets under management. A typical fee might be between 0.25 per cent and 1 per cent, though some advisers may charge a different percentage depending on circumstances. Be sure to find out exactly what service you are receiving for this ongoing charge, and find out whether it is dependent on a certain level of gain, for example.

How financial advice can save you money

First of all, a financial adviser can help you save money in many different ways. For instance, they can recommend pension schemes, investments, mortgages and protection products with lower administrative fees, saving you significant costs over the long term. They can also help you save more effectively, so that your money isn’t eroded so much by tax and inflation.

Most importantly, they can help you avoid costly mistakes, such as buying an inappropriate financial product, losing money through an error of judgement, or falling victim to fraud.

How independent financial advisor fees pay for themselves

Even more valuable is the way financial advice can help to grow your money. For example, the Value of Advice report2 by Unbiased found that those who took advice on pension saving near the start of their careers saved an average £34,300 more than those who took no advice – not including tax relief or compound interest.

 

Start at age 35

Start at age 25

Cost of advice on a £200/month pension contribution

£500

£500

Boost to retirement savings

extra £25,730 in pension pot (excl. tax relief and interest)

extra £34,300 in pension pot (excl. tax relief and interest)

Return on the initial cost of advice

4,336%

5,813%

Financial advice is especially important leading up to retirement, and at the point of retirement itself. It can help you boost the value of your pension in your final years of saving, and then help you set up arrangements that ensure the right level of income in retirement, while minimising the risk of running out of money. Alongside the significant monetary savings, the two greatest benefits of advice are the confidence to make decisions, and the peace of mind that comes from making the right ones.

Unbiased.co.uk research carried out in July 2018
Value of Advice research 2015

Let us match you to your
perfect financial adviser

About the author
Nick Green
Nick Green
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.