By clicking a retailer link you consent to third-party cookies that track your onward journey. If you make a purchase, Which? will receive an affiliate commission, which supports our mission to be the UK's consumer champion.
In this article
Both independent financial advisers (IFAs) and restricted financial advisers must agree up front how much you will be charged for their services, when you'll be charged and how payments will be made to them.
There are three main ways you will be charged:
Most advisers charge you by taking a percentage of the investment.
The Financial Conduct Authority (FCA) says advisers charge an average of 2.4% of the amount invested for initial advice and 0.8% a year for ongoing advice (1.9% p.a with underlying product and portfolio charges factored in).
The adviser generally pays themselves by selling a proportion of your investments equal to the fee, in a similar way to investment platforms.
Members can get a financial plan and cashflow forecast with an Octopus Money expert for £149.50*
Book free intro sessionYou must be at least five years off retiring, other eligibility criteria apply. Offer ends 17 January 2025, T&Cs apply.
Some advisers take payment as a one-off charge that covers everything from the fact find to the plan implementation. This advice would be tailored to your needs, but could vary wildly from adviser to adviser.
You could be charged an initial fee for the recommendations and then a flat fee annually for reviews or each piece of work your adviser undertakes.
See below for some examples of flat fees for particular services.
Fees set out as an hourly rate are simple and easily evidenced, but beware, as this method can end up with costs spiralling out of control.
You could expect to pay anything between £30 to £250 an hour - the average cost in 2023 was £196 per hour, according to VouchedFor.
Here's what you could expect to pay for three scenarios commonly searched for on adviser comparison site VouchedFor.
| Scenario | Average cost over five years |
|---|---|
| Taking out a £300,000 mortgage | £419 (upfront) |
| Creating a financial plan involving £100,000 of investments and receiving ongoing advice about it for five years | £7,597 (£2,795 upfront and £4,802 ongoing) |
| Investing £250,000 and receiving ongoing advice about it | £14,805 (£8,881 upfront and £9,940 ongoing) |
| Consolidating three pension pots totalling £500,000 and receiving ongoing advice about it | £27,868 (£8,881 upfront and £18,987 ongoing) |
| Average hourly rate | £196 |
Source: VouchedFor, 2023
It's worth keeping in mind that financial advice can pay for itself many times over.
That could be through the adviser picking you more suitable investments, shielding them from tax, and putting in place measures for if the worst happens, such as income protection.
Which? Money members can get impartial guidance from our experts, based on 350 years’ combined financial services experience.
Find out moreYou can get financial advice on a portfolio of a few thousand pounds, but finding an adviser may prove a challenge.
According to the FCA, the average advised customer has over £150,000 of assets under advice.
The number of IFAs prepared to work with clients with less than £50,000 to invest has halved from 53% in 2019 to only 25% in 2023 - according to the 2023 Schroders Adviser Annual Survey of 400 advisers. One in five advisers won't accept customers with less than £200,000 to invest.
If you have a smaller amount to invest, an adviser who charges you percentage fees might be reluctant to take you on, as they might feel the amount of revenue they would generate might not justify the cost of offering you their service.
You can use VouchedFor or Unbiased to filter advisers according to your investment pot size. If you can't afford the remaining options, you may be able to pay an adviser a fixed fee to get one-off advice, instead of paying for an ongoing service.
Unfortunately, it's rarely as simple as looking on their website.
When Which? checked the websites of the top 20 firms in the FTAdviser Top 100 Advisers 2022 list, 15 of them had no mention of fees.
Of the ones which did show pricing, some displayed their hourly rate per consultation, while others showed their implementation fee and ongoing percentage fee for hypothetical scenarios. Some displayed associated product-related charges, but not all.
IFAs aren't required to display their charges information on their websites, and many will ask to have an initial meeting with you first to ensure their quote is accurate based on your financial situation.
It's still important to shop around and not go with the first IFA you meet - there could be one that suits your needs better, and is better value for money. We generally advise getting three quotes before making a decision.
Some investment platforms offer one-off advice sessions for a fixed fee from around £300 to £600.
But in most cases these advisers are restricted - they can only recommend their own services and products.
Here are some of the main options:
| Provider | Description | One-off costs | On-going costs |
|---|---|---|---|
| Aviva | Aviva Financial Advice has pension and investment advice options. | Report fee of £625 | 2% of the value of your assets, then a decreasing percentage for larger amounts |
| Bestinvest | The investment platform offers financial coaching sessions, non-specific to individual investments | Free | n/a |
| Charles Stanley Direct | OneStep Financial Plan gives you a personal consultation with a financial adviser to produce an action plan, and OneStep Financial Coaching for a one-hour coaching session with a qualified financial planner | £150 for one-hour coaching session, £900 for personal consultation | n/a |
| Hargreaves Lansdown | Investment advice helps you to choose the right investments, while financial planning helps you work towards a goal | n/a | Investment advice (fee of 1%) or financial planning (between 1% and 2% plus VAT), minimum fee of £495 |
| Moneyfarm | The robo-adviser offers fund portfolios that are managed on your behalf with access to a dedicated consultant for fees | n/a | Consultant costs between 0.35% and 0.75% - larger portfolios have lower percentage charges |
| Nutmeg | The robo-adviser, which is backed by JP Morgan, launched its service in 2018 and offers restricted financial and retirement planning advice. | £575 | n/a |
Note: costs correct January 2024
Many financial advisers offer a free initial consultation, which involve explaining what your financial needs are and identifying where you need help.
A good adviser will also talk you through your options and the services it offers to help you take the next steps.
That's where the free bit ends. If you decide that you want a professional adviser to manage your financial affairs, you will only get firm recommendations and a strategy provided to you if you go ahead and agree to use their services.
However, if you're looking for general advice - sometimes called 'guidance' without recommendations, there are a few options - particularly if you are planning your retirement.
There are dozens of firms offering debt advice - the adverts for some of which imitate genuine established debt charities.
These firms could end up directing you to use expensive or unsuitable strategies.
Our guide includes several reputable debt charities with decades of expertise.
Paying for financial advice will often come out as a percentage of your investment, so you don't need to worry about paying a bill.
If you are paying a flat fee, or hourly, then there are some ways to help you pay:
Introduced in April 2017, the Pensions Advice Allowance lets you withdraw up to £500 from your pension savings to put towards the cost of retirement and pensions advice.
This £500 allowance can be used three times, which is designed to allow you to access retirement advice at different stages of your life. You may, for example want advice when choosing a pension, and again when you're deciding what to do with your savings.
However, you can only use the allowance once per tax year.
The good news is that you won't be charged any tax on your withdrawal, provided you use it to pay for financial advice.
The Pensions Advice Allowance is available at any age, but can only be used by people who have a defined contribution pension. The scheme is not available for those that have a defined benefit, or final salary, pension.
Companies can also offer to pay for financial advice for their employees without paying income tax.
This tax-exemption has always existed - but increased in April 2017 from £150 to £500.
In combination with the Pensions Advice Allowance, this means you could get £1,000 towards paying for pension or retirement advice.
'Trail' is the ongoing commission that advisers used to receive from your investment funds.
Advisers can still receive trail commission if the advice was given before 1 January 2013. Trail can also still be charged if you move to another adviser, as long as the adviser discloses the amount of trail to you immediately.
However, if your adviser switches you to a new investment, or recommends increased contributions to your investments, you will have to pay an explicit fee.
If you suspect you are still invested in funds that pay trail commission, it would make sense to ask your adviser to review your portfolio.