Many elements go into how much the advice will cost you, and it can vary widely between advisers and what advice is provided. This can make the world of advice fees seem very confusing and hard to work out what you wild be paying and how much actual value you will get for your money.
 
Generally, most advisers will offer you a free initial consultation/phone call to go through with you what the industry calls a Fact Find document. This will capture your existing financial situation, including your income & expenses, assets & liabilities, and goals and objectives. At this stage, they will also provide you with a Financial Services Guide (FSG). The FSG informs you of the areas of advice they are licensed to provide and what your rights and entitlements are.
 
Once these have been established, the adviser can then discuss potential strategies appropriate to your circumstances. It is at this stage when you have agreed on a Scope of Advice (industry jargon, it's what strategies and areas of advice you agree on) that they will discuss the costs, which will vary significantly depending on the scope of advice)
 
For example, a limited advice document that only includes insurance recommendations will be much cheaper than a complex plan that includes recommendations for debt reduction, cash flow management, superannuation advice, insurance recommendations & estate planning. At this stage, you will start to get an idea of the value the recommendations will provide.
 
How an adviser is remunerated for the advice you receive vary's from adviser to adviser, some advisors may charge you an upfront advice fee. Some advisors will work on commissions paid by the insurance provider. Some will charge an upfront advice fee and receive the commissions paid by the insurance provider. You should note that since 2014 advisors are not allowed to receive any commissions from investment products.
 
There is also the ability to pay for some of the advice from your superannuation account if the advice you are getting has recommendations for your super. Some of the advice may also be tax-deductible if there are recommendations on an already setup investment portfolio.
 
All advisers will ensure you are fully aware of the cost of the advice and how they will be paid before agreeing to move forward. Once you have agreed, the adviser will begin work on your Statement of Advice (more industry jargon, it's the document that contains all the recommendations and outlines the costs of advice and why the recommendations are in your best interest).
 
Take the process we utilise at Trl Financial Solutions, for example:

• Our first contact with you is usually a 15-minute discovery phone call that lets you know about us and identifies the areas of advice you seek and where we can help.

• Our Second contact is an "Understanding You" meeting done by Zoom or in Person. In this meeting, we will:
  • Help determine your goals and objectives.
  • Help identify your current financial position.
  • Review your budget to ensure you know exactly what's coming in and what's going out.
  • Complete an Insurance Needs Analysis to determine the cover level to ensure you and your loved ones are provided for.
  • Review your existing superannuation arrangements.
  • Determine what Estate Planning setup you have

• Our Third contact with you is a "Strategy" meeting by either Zoom or in Person. This meeting is all about discussing all potential strategies appropriate to you in line with your goals and objectives, identifying which ones you would like to be included in the plan, and agreeing on the scope of advice. At this stage, we will discuss the costs associated with the recommendations and only once you have agreed do we move forward with producing you with a plan.

 
As you can see from our process, there is a lot of information and time received before you being asked to "put your hand in your pocket." We do this to ensure that you are fully aware of the value you will get from the advice and know exactly what you are paying for.
 
What should you look out for?

• Not knowing hat you are getting - Do not pay for anything before you fully understanding what you are getting for the fee.
• Asset-based advice fees - The royal commission's outcome has led to ensuring you are getting value from your ongoing advice fees. This means that if you are charged an asset-based fee of 0.55%, what makes the service level different from an account with $100k versus an account with $1m. Can they articulate the value of the increased fee?
• High implementation fees – These can also be worked into the cost of advice by some advisors and will usually be time-based; however, sometimes you may come across an asset-based advice fee, which again the work related to the fee can sometimes be skewed.
• Vertically integrated product recommendations – Basically, in the past, this was like a "would you like fries with that" product upsell in big financial institutions. For example, you go to a big bank to get a loan, and then once you have signed your loan docs, you are ushered into a room to get financial advice from a financial planner who would have only had the ability to recommend products that the bank offered. These day's it's a little different; however, there are still some significant corporations with minimal approved product lists.

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If you feel you are ready and would like to speak with me please feel free to Contact Us to arrange a time for a quick chat to determine if there is anything I can help you with.