Over 90% of advisers say they plan to increase their fees next year, according to Adviser Ratings.
This was the result of rising costs related to compliance, insurance and staffing expenses as well as the wider inflation rise which is expected to peak at 8%.
Median advice fees had risen 8% since last year and had risen 40% since 2018.
Data from the firm’s Adviser Landscape Report showed the median advice fee was $3,529, rising to a maximum of $12,000 in 2021. This was up from a median of $2,510 in 2018.
Just 7% of respondents said they expected to keep their fees at their current rate.
This need to increase fees was also making firms more selective on the clients they worked with in order to remain profitable. The average fund under administration per client was now $785k, up from $643k in 2018.
However, earlier research from the company found most consumers felt advice was already unaffordable and three-in-five would only pay up to $500 to see an adviser.
This figure was still $300 higher than the minimum advice fee in 2021 which was $800.
Only one-in-20 would pay between $2,500 and $5,000, a figure more reflective of current fee pricing.
Genuine question: Are advisers increasing their fees just because they can or because they have to?
According to the well-publicised KPMG study that was commissioned by the FSC, comprehensive advice costs $5335 per client and takes 23.9 hours on average to produce.
According to ASIC report 627 most people are after superannuation and retirement advice (not comprehensive advice) – and most people do not have complex arrangements.
There is no way in the world it should be taking 24 hours to produce this type of advice – even with all the compliance steps we need to abide by.
Retirement advice for everyday people (most people) should take about 10 to 18 hours tops (depending on whether its for singles or a couple).
The figures that keep getting thrown around do not make much sense, especially as financial advice technology has improved in recent times.
It should still be possible to run a profitable business charging $2,000 – $3,000 per client – especially for advisers with no office overheads.
I get the feeling that too many advisers are charging what they can get away with.
Just my opinion.
“Especially for advisers with no office overheads”….really???
Sounds like your opinion is gained from a chair in an Ivory Tower. Combine your opinion with that of ASIC, FSC, and KPMG – and the result is – more opinions and very likely not one single experience meeting and providing personal advice to a retail client under BID?
Ivory Tower seems accurate IMO.