How much does financial advice cost?

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

The short answer is that the cost of advice depends what kind you need. But it’s truer to say that the cost of advice ought to be less than the cost of no advice at all.

What are the typical fees of financial advisers?

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 fees for typical adviser services.

Advice and set up of £11,000 investment ISA

£450

Advice on a £200 a month pension contribution

£580

Advice on defined benefit pension transfer

£1,500

At-retirement advice on £200,000 pension  pot

£2,500

Setting up a drawdown scheme on a £300,000 pension pot

£3,500

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. You can find out more about the cost of financial advice in our guide.

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.

…and make you more money

Even more valuable is the way financial advice can help to grow your money. For example, the Value of Advice report 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

£580

£580

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.

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