How financial advisers charge
Charges vary by adviser, by the size of the job and by how you pay. Most advisers charge in one or more of these ways:
- An initial fee for looking at your situation and making a recommendation, either a fixed amount or a percentage of the money involved.
- An ongoing fee if the adviser keeps reviewing your plan and your investments, often a percentage of the money they look after each year.
- An hourly rate for a specific piece of work.
- A fixed fee for a defined job, such as a review of your pensions.
Advisers must tell you their charges, in pounds and pence where possible, before you commit.
Typical costs
| Type of charge | Typical range |
|---|---|
| Hourly rate | £100 to £350 an hour |
| Average hourly rate | £205 an hour |
| Initial advice on up to £100,000 | £2,000 to £3,000 |
| Ongoing advice | Often 0.5% to 1% a year |
| Pension Advice Allowance | Up to £500 from a defined contribution pension, tax-free, up to three times (no more than once per tax year), if your scheme offers it |
Not every pension scheme offers the Pension Advice Allowance. Fees are examples, not quotes.
How a yearly fee adds up
A yearly percentage fee makes a noticeable difference over long periods. In our illustration, a 1% yearly fee reduces £100,000 growing at 5% a year by about £46,000 over 20 years.
| Yearly fee | Value after 10 years | Value after 20 years | Difference at 20 years |
|---|---|---|---|
| None | £162,889 | £265,330 | - |
| 0.5% | £155,297 | £241,171 | £24,159 less |
| 1% | £148,024 | £219,112 | £46,218 less |
IFA Connect illustration: £100,000 growing at 5% a year before fees, with the fee deducted from growth each year (equivalent to net growth of 4.5% and 4% a year). Hypothetical, not a forecast. Returns are not guaranteed, and product and platform charges apply with or without an adviser.
Whether a fee is worth paying depends on what the advice achieves for you, which no illustration can show.
What affects what you pay
- How much you need help with, and how complicated it is.
- Whether you want one-off advice or an ongoing service.
- How the fee is worked out: a percentage fee rises with the money looked after, a fixed fee does not.
- Product and platform charges, which are separate from the adviser’s fee and apply with or without an adviser.
Questions to ask about fees
- What will the advice cost in pounds, both at the start and each year?
- What ongoing service is included, and how often will it happen?
- What other charges will I pay, such as platform and fund charges?
- How do I stop the ongoing service if I no longer want it?
Our guide to whether you need a financial adviser covers when advice is required by law, the free alternatives and how to check an adviser.
What IFA Connect costs
Nothing. Our introduction is free. Advisers pay to be part of the IFA Connect network. You never pay us, and what we are paid makes no difference to the fees you agree with your adviser or to which adviser we introduce you to. If you choose to work with an adviser, their fees are agreed directly between you and them before you commit to anything.