Generally, advisers won’t charge you anything for the first appointment. This is a good opportunity to see if you and the planner are a good fit. After the first meeting, once I have summarised your goals and objectives and completed the required research, I will prepare a one or two page summary of what my advice will likely look like, if this scope of advice is agreed upon, then we will begin to prepare the ‘Statement of Advice’ (SOA).
Statement of Advice
Typically the cost of an SOA for my clients is $2,500 + GST (the average for most financial planners is around $4,000, however I have lower overheads). The fee reflects the amount of work involved. The fee, if related to superannuation, can, in most cases, be paid from your superannuation account so does not need to affect your personal cash flows. For complex advice, for example, establishing a Self Managed Super Fund to purchase property using borrowing, this fee can be up to $5,000 + GST. Much of this fee is paid to ‘paraplanners’ who assist in the preparation of the SOA in a compliant format.
Some planners will charge a fee to implement advice, this is often a percentage of the funds being invested – I do not charge implementation fees.
Ongoing Advice Fees
Ongoing advice fees are paid for regular reviews, reports, newsletters, portfolio re-balancing and so on. The ongoing advice fee depends upon the number of hours spent to manage portfolios, some clients will have more complex needs. For smaller superannuation or investment balances I do not charge ongoing advice fees as there is not a great deal of work involved as an ‘index’ fund may be recommended which does not require much maintenance, however for more complex investment structures the ongoing advice fee will be around $4,000 p.a. for portfolios of $500,000, $6,000 p.a. for portfolios of $750,000 and $8,000 p.a. for a $1,000,000 portfolio. Larger portfolios will be negotiated on a case-by-case basis, again depending on the complexity of the constructed portfolio.
Life insurance commissions
If the advice is only related to your personal insurances, in most cases I won’t charge a fee as the insurance company pays me a commission. The rate of commission (in 2020) is 60% of the first year’s premium and 20% p.a. of the premium, for example, a $1,000 p.a. premium will pay an initial commission to the adviser of $600 and $200 p.a.