Financial Planning – How Much Does Financial Advice Cost?

Financial Advice Cost: How Much and Is It Worth It?

Are you thinking about getting expert help managing your finances? This can be a smart move that will set you up for long-term financial success.

At Rising Tide, our financial advisors can help you make informed decisions about your money. We can assist with everything from budgeting, investing, and retirement planning to managing debt and saving for big purchases. Our guidance is 100% personalised to you, your income, goals, and challenges.

But before you can decide, you need all the details — including the cost. Here’s what you need to know.

Understanding Financial Advice Cost

How much does a financial advisor cost?

The cost of financial advice will depend on the scope of the advice. In year one, it will often be around $6,600 – $19,800 depending on your needs, investable assets & the complexity of your circumstances., but the good news is you can often use your superannuation balance to pay for some of this.

The cost of financial advice is often offset by the superannuation fees saved – and more importantly the peace of mind you get from taking control of your financial future.

How Financial Planning Costs Work

Not all financial planning costs are created equally. Financial planners use different payment models to charge clients like you for their services.

The most common pricing models are fixed and percentage-based fees. Some advisors also earn a commission. Let’s break it down.

Fixed Fees

Some financial advisors charge fixed fees. This means you pay a set price for each service. Here are some examples:

• You pay a one-time fee for a detailed financial plan.
• You pay a separate fee to put your financial plan into action.
• You pay regular fees for continuous financial guidance.

Some advisors charge fixed fees based on your situation and the advice you need.

In addition, some bill you hourly. This fixed pricing model is less common.

Percentage-Based Fees

Another pricing model you’ll run into is percentage-based fees. These are tied to the value of your assets or the performance of your investments.

Here are the two types:

• Asset-Based Fees: A yearly fee based on a percentage of your total assets. For instance, if you have $100,000 in assets and the fee is 1%, you pay $1,000 each year.

Commissions

Advisors are not allowed to earn commissions on investments, which creates a conflict of interest.

That being said, they can still receive commissions on life insurance, which helps reduces the fees clients pay to implement life insurance. The commission is capped at 60% of the premium in the first year and 20% each year after that.

The Cost of Financial Advice at Rising Tide

Finding the right financial advice can change your life for the better. Here are the costs you can expect when working with Rising Tide:

3 Factors that Affect Financial Advisor Costs

Why do some financial advisors cost more than others? Here are three contributing factors to be aware of:

1. The Type of Advice

Fees might vary depending on the type of advice you need.

Sometimes, finances are straightforward. You might need guidance on the fundamentals, like budgeting or saving an emergency fund.

Other times, finances are extremely complex. Services like retirement planning generally cost more because they demand more time and expertise.

2. Your Unique Financial Situation

Your financial situation affects the cost. If you have multiple investments and debts, for example, it will cost more.

3. The Type of Fee Model

Advisors use different fee methods. Fixed fees, percentage-based fees, and commissions all impact the total cost.

Is It Worth Paying for Financial Planners?

Paying for a financial planner can be a smart investment in your future. But is it worth it? Let’s weigh the pros and cons.

The Pros of Working with a Financial Planner

• A financial advisor helps you set realistic life goals. This makes your future plans achievable.
• Advisors guide you in making smart choices that protect your financial security. This can save you money in the long run.
• Advisors are particularly helpful during major life changes, such as starting a family, planning for retirement, or managing an inheritance.

The Cons of Working with a Financial Planner

• Financial advice can be expensive. Understanding the costs upfront is as important as deciding whether it’s worth it.
• If your financial situation is simple, you might not need a planner.

Are Financial Planning Fees Tax-Deductible in Australia?

You can claim a tax deduction on fees paid for investment advice. For example, if you earn dividends from an investment, the advice fee might be deductible.

According to the Australian Taxation Office (ATO), these fees are not tax-deductible:

• Accumulated superannuation fees
• Advice about non-assessable pension income
• General financial advice
• Initial investment advice
• Preparing a financial plan
• Upfront fees

Still unsure? Check with a tax advisor for personalised information.

Get Personalised Advice

Schedule a chat with our friendly team to learn more about our fees and how collaborating with a financial planner can set you up for success.

FAQs

References:

https://www.canstar.com.au/superannuation/financial-advisor-fees-cost

https://moneysmart.gov.au/financial-advice/working-with-a-financial-adviser

https://moneysmart.gov.au/managing-debt/financial-counselling

https://www.canstar.com.au/superannuation/free-financial-advice

https://www.ato.gov.au/law/view/document?DocID=DXT/TD2023D4/NAT/ATO/00001