How much does financial advice cost (and am I getting good value?) Updated for 2026
- Noel Watson CFPᵀᴹ - Chartered Wealth Manager
- 4 days ago
- 10 min read
Updated: 17 hours ago
Table of contents
Introduction
If you run an internet search, you will find many articles that discuss how much it might cost to work with a financial adviser.
However, there are often several issues and limitations with these articles, including:
They don't tend to differentiate between various scenarios. For example, a person several decades from retirement who is looking to start their investing journey will most likely have very different needs from someone approaching retirement with a more complex scenario. A complicated situation will likely require more of a financial adviser's time and, therefore, increase fees, but this is not always reflected in the examples provided.
They tend to concentrate solely on cost without considering what service you are receiving for the fees you are paying.
There is usually just a focus on what the financial adviser will do with your investments. However, investment management is considered by many to be commoditised and a small part of an adviser's retirement-planning service, meaning these articles aren't much help to those seeking an adviser for their retirement planning.
They tend to focus on financial adviser fees but do not consider total costs, including platform and investment fees.
This blog addresses these shortcomings and is aimed at two groups:
Those who don't currently have a financial adviser but are thinking of engaging with one to assist with their retirement planning
Those with an existing financial adviser relationship who are starting to plan for retirement.
We will help both groups build a picture of:
What fees they are paying.
Whether these fees represent good value.
One-off financial advice: is it worth it?
Engaging a financial adviser for a one-off financial advice and retirement planning exercise might be possible. But, in our experience, an ongoing relationship tends to yield the best results. We believe paying for a one-off piece of financial advice is similar to paying a personal trainer for a one-time consultation. You either have the knowledge, motivation and desire to do things yourself, or you don't. One session with a personal trainer is unlikely to provide much education or eliminate your destructive behaviours! Noel's book, 'Planning for Retirement: Your Guide to Financial Freedom' is available on Amazon for those who want to plan their retirement on a DIY basis. We send this book to all potential clients; perhaps counterintuitively, many who read it become clients. The feedback we receive is that once they understand what we actually do and the work required to build, implement, and maintain a retirement plan, they are happy to pay for ongoing financial planning and advice.
Guidance vs. financial advice
Financial advice is generally considered a personal recommendation based on your specific financial circumstances and objectives. Guidance is a broader term that focuses on providing general information. Only firms regulated by the FCA can give financial advice, whereas anyone can provide guidance.
If you're unsure whether you're receiving guidance or financial advice, ask for clarification.
This blog focuses on various financial advice offerings and does not consider guidance alternatives.
The fee vs. value tradeoff
Volumes could be written on financial adviser charging structures! We will try to highlight the key points to look out for. Let’s first put the fee discussion in context. In an ideal world, individuals planning for their retirement would be able to:
Undertake a life planning exercise to understand the cost of their ideal lifestyle, both now and in the future.
Create and maintain a financial plan designed to achieve their life-planning goals, iterating as required.
Create a suitable investment portfolio with sufficient diversification that balances the risk (volatility) required to deliver the financial plan against the risk (volatility) they are happy to accept.
Construct a withdrawal strategy that provides the desired income in retirement whilst giving sufficient confidence that the investment portfolio will not be exhausted. Withdrawals would be adjusted as necessary depending on market conditions.
Ensure lifetime taxation is optimised.
Generate returns in line with broad market indices and not succumb to investor pressures. (e.g., buying high, selling low, etc.).
Pay no fees.
Realistically, this utopia is very unlikely. For example, being objective enough to undertake your own financial planning exercise can be challenging. Indeed, many financial planners hire a financial planner for this very reason. Funds and platforms charge fees. The general public does not widely use cash flow and retirement planning tools, and many investors are subject to biases that affect their returns and, therefore, their retirement plans.
When considering the cost of financial advice, we suggest looking at it not through the lens of an ideal implementation but instead through the lens of real-world pragmatism. We examine the effect of fees on safe withdrawal rates in a blog post. There is no escaping the reality that, all else being equal, costs have an impact.
Only you can decide whether the fees the financial adviser will charge are worth paying.
Comparisons are tricky
So, how do you compare financial adviser offerings and fees? It is vital to ensure that you compare like with like when evaluating competing offerings. Suppose Adviser One is offering just financial advice relating to the creation of an investment portfolio (item 3 below) for £2,000:
1. Life planning
2. Financial planning
3. Investment portfolio construction & financial advice
4. Withdrawal strategy
and Adviser Two is offering all four stages for £3,000:
1. Life planning
2. Financial planning
3. Investment portfolio construction & financial advice
4. Withdrawal strategy
If you believe that stages one, two and four are essential (and after reading 'The five stages of planning for a successful retirement', we hope you do!), you will most likely conclude that Adviser Two offers much better value despite costing 50% more.
It is also essential to consider the total cost over the lifetime of the adviser relationship, not just the initial fees. The following sections take a deeper dive.
The different types of fees and when they might apply
The lifetime cost of working with a financial adviser can broadly be broken down into three areas:
Initial fees
Ongoing fees
Exit fees
We will examine each of these, but before we begin, let’s look at the five main types of costs that may be incurred:
Financial adviser fees: Charged by the financial adviser for providing financial planning (hopefully!) and advice.
Fund management fees: Charged by the fund manager for looking after your invested money.
Fund management transaction costs: The expenses incurred by the fund when trading underlying holdings.
Discretionary investment management (DIM) fees: Discretionary Investment Management is a service that investment managers offer. They manage a portfolio on behalf of a client, aligning it with the client’s objectives and risk profile. One of the goals of a DIM service is to generate excess risk-adjusted returns (effectively beating the market). In practice, this can be a tough ask as you are paying two sets of fees, those of the DIM and those of the underlying fund managers. This is a challenging hurdle to overcome, and if your financial adviser recommends this (not all do), ensure you are happy with the value you are receiving, given the stiff competition in the marketplace, and that a simple, low-cost approach (one that doesn't require a DIM) often yields the best outcome.
Platform fees: A platform can be thought of as a supermarket. Instead of stocking groceries, it stocks investment funds and assets. It also facilitates their monitoring, purchase, and sale, and for this, they will charge a fee.
Initial fees
Financial adviser initial fees
There are effectively three ways a financial adviser can charge for initial financial advice:
On a percentage basis: For example, if a financial adviser charges a 1% initial fee and the total sum invested is £500,000, the initial financial advice fee would be £5,000. If the total sum invested were £1,000,000, the initial financial advice fee would be £10,000.
On a time and complexity basis: The amount of money invested doesn't always directly relate to the amount of work a financial adviser needs to undertake. For example, should someone with an investment pot of £1,000,000 but a relatively simple financial situation pay twice as much as someone with £500,000 with more complex needs? Those financial advisers who charge based on time and complexity try to cater to this. For example, a client with a moderately complex financial situation might incur a financial planning fee of £4,000. In addition, they have two pensions and an ISA to review, costing £1,500 (3 x £ 500). This gives a total initial financial advice fee of £5,500.
Initial fees: Time and complexity
On an hourly basis: For example, a financial adviser may estimate that the retirement planning process will require 20 financial adviser hours, 10 paraplanner hours and 10 administrator hours. They would, therefore, quote a total initial financial advice fee of £5,700, as shown below.
Unbiased estimates a financial adviser would typically charge an initial fee of £6,700 for retirement advice on a £500,000 pension pot.
The FCA states that the average initial fee is 2.4%, and that, in their research, the average financial adviser client has assets of around £250,000, which equates to an initial financial advice fee of around £6,000.
While many debate the fairest way to charge financial advice fees, we believe that as long as the costs are transparent, you know what you're paying, and you feel you're getting value for money, that's all that matters.
Fund management initial fees (including transaction costs)
The days of fund managers charging 5% to access their funds are mostly a thing of the past, especially if you are investing via a platform. However, it's not uncommon to incur small indirect costs when investing in a fund, such as with dual-priced funds. This essentially means you are paying slightly more for the fund than someone who sells the same fund simultaneously. This is often known as the bid-ask spread.
Discretionary investment management initial fees
It's rare for a DIM or platform to charge an initial fee (but you should still check!).
Platform initial fees
Platforms typically don't charge initial fees.
Ongoing fees
Financial adviser ongoing fees
Similar to initial fees, there are many ways to charge for ongoing financial advice, including percentage-based and fixed fees. FCA data indicate that the majority of firms (68%) charge ongoing fees as a percentage.
The FCA estimates that ongoing financial advice fees average 0.8% per year.
In its 2026 Financial Advice Business Benchmark Report, NextWealth found that advice fees are currently 0.83% per annum.
Citywire analysis found the average ongoing fees is 0.85% per annum, with 1% pa the most popular option for a client with £500,000 invested.
In St James Place's new charging model, the adviser receives 0.8%.
One potential issue with the above research is that it lacks granular detail on the average ongoing fees for different investment amounts. While the most common charging model is percentage-based, many advisers operate a tiered structure, with fees reducing as a percentage as the pot grows.
Our internal research indicates that a client with £500,000 invested pays average ongoing adviser fees of 0.89%, while for someone with £2,000,000 invested, the average is 0.82%.
One essential thing to check is whether your financial adviser plans to charge you for new money invested in future years. For example, suppose a couple both maximise their ISA contributions each tax year, and the financial adviser charges an initial financial advice fee of 5%. This could mean an additional £2,000 in fees to pay per year, which may not be reflected in the headline numbers!
Fund management ongoing fees (including transaction costs)
Research from Timeline indicates the average Ongoing Charging Figure (OCF) for a fund in a Model Portfolio Service (MPS) is around 0.3%.
But this doesn't tell the whole picture: actively managed funds typically charge more than double this, according to Morningstar research, while passive funds charge less. For example, the "No Brainer" passive portfolio can be constructed for a cost of around 0.2% per annum.
The NextWealth research referenced above indicates that the average OCF for funds held by financial advisers is 0.66%.
Transaction fees (which aren't included in the OCF) also vary significantly, even for a given fund, but tend to be lower for passive-based offerings (typically <0.1%).
Discretionary investment management ongoing fees
DFM fees vary wildly, from less than 0.1% for an offering such as Timeline to over 1% per annum (we won't mention any names)! As shown in the Timeline image above (yellow section), DFM fees tend to average around 0.2% for MPS offerings.
Platform ongoing fees
NextWealth's research (referenced above) indicates that the average platform fee is 0.31%, whereas Timeline reports 0.27%. Langcat suggests the average for someone with £500,000 invested is 0.26%.
As with ongoing adviser fees, platform fees tend to decrease as a percentage as the investment amount increases.
Total ongoing fees
NextWealth estimate total ongoing fees to be 1.8% per annum, whereas the FCA estimate it to be around 1.9% per annum. Both figures exclude transaction costs.
Exit fees
Exit fees are a hotly debated topic, typically charged when a client terminates their relationship with a financial adviser within a specified time. Exit fees are becoming less common, but before entering into a relationship with a financial adviser, it's worth checking to see if exit fees could apply to you.
Conclusion
As can be seen, determining the cost of a relationship with a financial adviser can be challenging. Some questions to ask a prospective financial adviser include:
Can you give me a breakdown of the total fees for initial and ongoing financial advice in pounds and pence?
How much am I paying for each part of the chain, and how do you justify this?
1. Financial adviser (should be <1%)
2. Platform (should be <0.3%)
3. Fund manager (ideally <0.25%)
4. Fund manager transaction costs (ideally <0.1%)
5. Discretionary Investment Manager (ideally <0.1% if used).
6. Total (ideally <1.6% below £1,000,000)
How will your fees impact how long my retirement investments last?
Do you charge exit fees?
Do you get paid for giving me financial advice, even if I don't proceed with your recommendation?
How much will a client typically pay relative to me if they have half/twice as much as I have invested?
Next steps
If you are planning for retirement and are in one of the following situations:
You're struggling to understand what you're paying (or might pay) for financial advice.
You know what you're paying, feel these fees are excessive, and worry they might have a detrimental impact on your retirement plan.
Your financial adviser meets with you once a year to discuss investments (we call this the 'postman delivery service')!
please get in touch with us. Our fees are clear and competitive.
About Pyrford Financial Planning
Pyrford Financial Planning is an Independent Financial Adviser based in Weybridge, Surrey.
We specialise in retirement planning and provide independent financial advice, including pension and investment advice, and inheritance tax planning.
We offer a no-obligation introductory meeting, which will be held over Zoom.
Our office telephone number is 01932 645150.
Our address is No. 5 The Heights, Weybridge, Surrey, KT13 0NY.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Although best efforts are made to ensure all information is accurate, you should not rely on this blog for your personal situation or planning.
The value of your investment can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
About the author
Noel is passionate about helping clients plan for retirement, preparing and guiding them through this key life transition. He has written a book on retirement planning and regularly publishes retirement research on this blog.
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