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How Much Does a Financial Advisor Cost?

Published 08/05/2024 | Last Updated 09/05/2024

Written by:
Joel Simmonds
Head of Advice  

The thought of having to cover the cost of a financial planner’s fees and charges may be daunting. Thankfully, we’re here to give you all the information you need. When you considered that it’s a key part of building a safe, secure and comfortable financial future, the fees charged by financial advisors suddenly feel like a smart investment. Read on to find out why. 

The cost of hiring a financial advisor depends on a variety of factors, including the complexity of your financial needs, your goals, and the stage of life you’re in.

Financial advisors offer a spectrum of services, from helping you manage debt and budget effectively to providing sophisticated investment advice and retirement strategies. While fees charged by financial planners vary widely, remember that obtaining professional advice should be viewed as an investment in your financial health and future prosperity.

No matter if you’re at the outset of your career, actively building your wealth, or nearing retirement, the right financial advisor can offer invaluable guidance and tailored strategies. The challenge lies in finding an advisor whose expertise aligns with your specific needs and whose fees are transparent and within your budget. 

Let’s explore how financial advisors charge for their services and how you can get the best value for your money.

Table of Contents

Are Financial Advisor Fees Tied to Your Wealth?

Financial advisor charges vary depending on your life stage, your financial goals, and the complexity of your financial situation.

Financial advisors offer a range of services, from budgeting and debt management to investment advice and retirement planning. 

As such, a financial planner’s fees for these services can vary, but it’s important to remember that investing in expert advice is just that – an investment in your future financial well-being.

Whether you’re just starting out in your career, in the midst of growing your wealth, or approaching retirement, a financial advisor can provide valuable insights and strategies to help you make the most of your financial resources. 

The key is to find an advisor whose services match your needs and whose fee structure fits your budget. What’s the best way to find out? Just ask. 

Financial Planning Is Not Just for the Rich

Financial planning has often been shrouded in the misconception that it’s an elite service meant solely for the wealthy, which couldn’t be further from the truth.

It’s a myth that stops too many from getting the guidance they need, thinking that their finances don’t make the cut for professional help. But here’s the thing: financial planning is for everyone, no matter what your financial position might be. 

Being financially healthy isn’t just about how much you earn; it’s about playing your cards right, no matter what hand you’ve been dealt. 

The truth is, financial planning isn’t just for those who’ve already made their fortune. It’s for everyone — whether you’re fresh into your career, making your way up, or enjoying retirement. It’s about making the most of what you have, and you can do that by finding a financial advisor who fits within your budget. 

Sure, a well-off person might not be so concerned about the fees for financial advisors, but the mindset of wanting to improve their financial wellbeing, and the benefit of receiving good financial advice, is the same. We all want better for ourselves. 

A financial planner does more than dish out investment tips. They’re your ally in tackling debts, building a budget that really works, and setting goals you can actually hit. They make sense of confusing financial stuff and give it to you in easy-to-understand terms, so you’ve got the confidence you need to move forward. 

Teaming up with a financial planner gives you the know-how and tools to own your financial journey. It means no matter where you’re at in life or what your account balance says, you’re on track to get to where you want to be. 

The Advice You Need Changes Depending on Your Life Stage

Financial advice isn’t one-size-fits-all; it varies as you progress through life’s stages.

Life’s financial journey is a winding road, with every stage offering unique challenges and opportunities. Personalised financial advice is needed as you move through life’s different phases, be it launching your career, hitting full stride, or gearing up for retirement. 

Here’s a snapshot of how financial guidance can shape your journey, no matter where you’re at:

Getting Started 

If you’re at the starting line, juggling the newness of a pay check with the weight of HECS debt, or puzzling over the first steps of saving and investing, a financial planner is able to help. They’re there to set you on the right path, showing you how to tackle debts, craft a savvy savings plan, and get you started with the magic of compound interest. This kind of early leg-up is the stuff solid financial futures are built on.

Midlife Groove 

When you’re in the thick of your career, maybe earning more but also juggling more financial balls, a planner’s role shifts. They become your co-pilot, helping you explore investments, decipher retirement account jargon, and navigate tax responsibilities. They’re that crucial second opinion, making sure your financial moves sync up with your big-picture goals.

Retirement & Pre-retirement

And as retirement starts peeking over the horizon? That’s when a planner really proves their worth, steering your shift from building that nest egg to making sure it lasts as long as your retirement dreams. They’re your guide in fine-tuning investments, timing the release of your superannuation, and planning for all those post-work adventures and needs, like healthcare and maybe even a beach house.

Across each of these life chapters, financial advice isn’t just helpful; it’s transformative, offering clarity and strategy to help you make the most of every dollar and decision.

How Much Do Financial Advisors Charge in Australia?

Navigating the different choices around financial advisor fees can seem daunting with its various pricing structures, but it’s all about what works best for you and your financial situation.

For one-off financial advice, also known as for fee for service, or targeted strategy sessions, many planners offer hourly rates. A fee for service financial advisor can be a budget-friendly option, with costs typically ranging from $150 to $600 or more per hour. 

A fee only financial planner is perfect for tackling once-off specific questions or planning issues without a long-term commitment. On the flip side, the short-term nature of this service can be considered shortsighted, as it neglects the bigger picture.

If you’re after a more ongoing relationship, consider planners who charge retainer fees. Ongoing fees for financial planners, billed monthly or yearly, provide you with continuous support and strategy adjustments over time. How much? It varies and generally reaches into the thousands, but it buys your ongoing peace of mind and a dedicated financial ally. It also increases your chances of getting high quality, reliable advice. 

Then there’s the percentage-based model, often tied to assets under management (AUM). In this case, your financial planner fees are directly tied to the success of your investments, which can be a motivating factor for them to grow your wealth. These percentages generally fall between 0.5% to 2% annually and can be a fitting option if you prefer a performance-based arrangement.

Whatever your preference, the key is to find a cost structure that aligns with your financial goals and the level of advisory involvement you seek. It’s all about investing in a partnership that brings value to your financial journey.

Are Financial Advisor Fees Tax Deductible?

The answer depends on the nature of the advice. 

Generally, the fees paid for investment advice that directly relates to earning assessable income may be tax-deductible. This includes fees for advice on the buying or selling of shares, or advice and administration fees associated with managing your investment portfolio.

However, fees related to general financial planning or advice for personal financial management, which includes budgeting and debt management, are not typically deductible.

It’s important to consult with a tax professional to understand how these regulations apply to your specific situation, as tax laws can change and do have significant nuances.

How Do I Know I'm Ready?

Figuring out if you’re ready for a financial planner isn’t about hitting a magic number in your bank account. It’s more about the moments when you sense your finances are getting trickier or when you’re ready to change your financial situation. 

Take a good look at where you’re at financially. Is your financial plan coming together smoothly, or does it feel like there’s always a piece missing? A bit of honest thinking can reveal whether you’re cruising or if you could use a professional to steer you in the right direction.

Think over these points to see if a financial planner might be your next best move:

Dreaming big but not sure how to make it happen? If you’re eyeing a future home, wanting to set up education fund, or dreaming of a perfect retirement, a financial planner can set a you on a course that feels less like dreaming and more like doing.

Hit a life milestone? Big life events like tying the knot, welcoming a little one, switching careers, or getting an inheritance can really interrupt your financial progress. A planner can smooth out those ripples and help you stay on track. 

Not sure what to invest in? If the sheer number of investment choices has you spinning, a financial planner can help you pick the best options for your financial circumstances. 

Tangled up in tax? If taxes are taking more of your cash than you’d like, a financial planner can be a bit like financial weed killer, keeping more of your green in your garden.

Wondering if you’re saving enough? If there’s a nagging voice asking if you could be doing more with your savings or retirement plan, a financial planner might just have the answers you need.

Saying ‘yes’ to any of these could be your sign to team up with a financial planner. They’re all about making sure your financial world is spinning the right way. 

Getting Financial Advice Can Be Life-Changing

Navigating your financial future can be less about guesswork and more about strategy with a financial planner on your team. 

Here’s how the right financial advice can be a game-changer:

Achieving Financial Goals: A financial planner can help you set realistic financial goals and create a roadmap to reach them. From buying a home to saving for your child’s education, they can provide strategies to ensure you meet these milestones.

Creating Passive Income: Generating passive income through investments can provide financial freedom and security. A financial planner can advise on suitable investment vehicles that align with your risk tolerance and goals, helping you build a steady income stream for the future.

Optimising Investments: Investing wisely is key to wealth accumulation. Financial advice can help you diversify your portfolio, manage risks, and take advantage of growth opportunities, ensuring your investments support your long-term objectives.

Enhancing Lifestyle: A financial planner can help you balance enjoying life today while securing your future. They can assist in budgeting for lifestyle expenses, planning for travel or hobbies, and ensuring you have the financial means to live the life you desire.

Planning for Retirement: Determining the right age to retire and ensuring a comfortable lifestyle requires careful planning. Financial advice can guide you in building a robust retirement fund, optimising superannuation, and planning for healthcare and other retirement expenses.

So, When Should I Start?

This is a question we often encounter, and the answer is always the same: the sooner, the better.

We frequently see individuals who start their financial planning journey later in life, only to realise that they haven’t left themselves enough time to fully realise their financial potential. This can lead to missed opportunities and a scramble to catch up as retirement approaches.

Remember, it’s never too late to start planning for your financial future, but the earlier you begin, the better positioned you’ll be to achieve your goals. 

Starting early gives you the advantage of time, allowing you to leverage the power of compounding returns, make strategic investments, and experience long-term growth. It also provides you with more flexibility to adjust your plans as your life and financial goals evolve.

Regardless of your age, it’s never too early to start planning. The earlier you begin, the more time you have to build a solid financial foundation.

So, don’t wait until it feels like the “right” time – start today and take the first step towards securing a prosperous financial future.

Good Advice is Priceless

Financial planning is not a luxury reserved for the wealthy; it’s an accessible tool that can benefit everyone, no matter what their current financial position might be. 

In fact, when you consider the power that good financial advice has, and its ability to change your life, it seems like it’s almost too good to be true. 

So, whether you’re just starting your financial journey or are looking to get started with wealth creation, a financial planner can provide valuable guidance and strategies to help you achieve your goals.

Our advice? Don’t let anything hold you back from taking control of your financial future. Regardless of your financial situation, it’s never too early or too late to start planning. 

Take the next step today and discover how financial planning can transform your financial well-being, give you true peace of mind, and bring you closer to your dream retirement.

Contact us today to start building your new financial future. We look forward to meeting you! 

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December 5, 2024

This is a publication of Direct Wealth Pty Ltd, a wholly owned subsidiary of Direct Wealth Group Pty Ltd.

General Advice Warning – The information contained in this article is of a general nature and does not take into account your particular objectives, financial situation or needs. You should therefore consider the appropriateness of the advice for your situation before acting on it. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decisions regarding any products or strategies mentioned in this publication.

Disclaimer – While all care has been taken in the preparation of this blog, to the maximum extent permitted by law, no warranty is given in respect of the information provided and accordingly, neither Direct Wealth nor its related bodies corporate, employees or agents shall be liable for any loss suffered arising from reliance on this information.

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