Higher fees prompt rise in advice firm prices
Rising advice fees has prompted Radar Results to increase its price guide to a minimum of $3,000 per client.
Investment Trends previously discovered advice firms with a profitability of 40 per cent or more were charging upwards of $7,700 per annum. The research house also identified that average ongoing fees charged per client stood at $5,500 per annum in 2024 – a 17 per cent jump from $4,700 in 2023.
The average adviser client book had also declined from 120 in 2023 to 99 in 2024, reflecting a desire by advice firms to focus on the most profitable of their clients.
This is subsequently being reflected in prices for M&A activity, with Radar Results increasing its price guide for advice firms with investment and superannuation clients from a minimum of less than $2,000 to less than $3,000.
But even $3,000 is a low ballpark as the most in-demand businesses are those with clients who are paying fees between $4,000 to $8,000 per annum with high account balances.
Speaking to Money Management, Radar Results founder John Birt said: “It used to be that an average advice fee was $1,500, but that’s long gone now. The price of advice has been consistently going up and now it sits more around $3,000.
“We just aren’t seeing much demand with firms that small anymore. It has increased a lot to reflect the changing times and increased cost of living.”
The largest multiples were seen for businesses with fees per client above $5,000 per annum which stood at 2.7x to 3.5x.
Price multiple based on fee size per client
Source: Radar Results, June 2025
However, price guides remain unchanged for risk insurance clients at less than $2,000 per annum.
Looking at revenue type and client age, the most popular segment was investment and superannuation clients up to 64 years and risk insurance clients under 55 years, which both had price multiples of 2.5x to 3.2x, up from 2.3x to 3.0x last year.
“There are greater cross-selling opportunities for these clients and they are more likely to remain as a client,” Birt said. “If the client is only 40 years old and has life insurance, trauma and income protection, then that person might be paying it for another 20 years so they are more valuable.”
While advice fees are on the rise, Adviser Ratings said clients have indicated they are only willing to pay $911 on average to receive advice. When it comes to why they seek advice and what they value from a potential advice, consumers have detailed financial security and confidence as being a benefit of financial advice, indicating they see value beyond financial performance.
Similarily, Morningstar said Australian financial advice firms are experiencing a "champagne problem" regarding the fact advisers do not need to reduce their fees to remain competitive.
Daniel Needham, president of Morningstar Wealth, said: "The biggest indicator of attractiveness of an industry is the pricing. If there is a lot of competition and rivalry, then we see prices come down, and you see businesses go bankrupt or consolidate. For advisers in Australia, you have your ideal customer, you’re operating from referrals, and you are rarely forced to lower your prices.
“I view this as a champagne problem and another net positive for advice. What would seem an easy way to compete is not coming through in terms of prices coming down."
AUTHOR
Laura Dew
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