How Much Does a Financial Planner Charge? Is It Worth It?
How Much Does a Financial Planner Charge? Understanding the Value of Professional Advice
When considering the services of a financial planner, one of the first questions people often ask is: “How much does a financial planner charge?” While understanding the cost of professional advice is crucial, it’s equally important to consider the potential cost of not getting advice. Mistakes in areas such as tax management, investment choices, and cohesive financial planning can lead to missed opportunities, procrastination, and ultimately, a negative impact on your long-term financial wellbeing.
In this article, we’ll break down the typical fees associated with financial planners in Australia and discuss the hidden costs you might face without professional guidance.
What Does It Cost to Engage a Financial Planner?
Financial planners in Australia typically charge in one of several ways, depending on the nature and complexity of the advice provided:
Hourly Rate: The average hourly rate for financial advice can range from $200 to $500 per hour. This structure is ideal for clients seeking advice on a specific issue or those needing one-off consultations.
Flat Fee for Service: Many planners offer a flat fee for developing a comprehensive financial plan, which can typically range from $3,000 to $6,000 or more, depending on your financial circumstances and the depth of the plan.
Ongoing Service Fees: If you require continuous advice and management, financial planners may charge an ongoing fee, typically ranging from 1.0% to 1.5% of your total assets under management (AUM) each year. This fee covers regular reviews, strategy updates, and support for complex issues like investment management and retirement planning. This may also be charged as a fixed fee such as $3,000 to $6,000 or more p.a.
Performance-Based Fees: Some planners charge a fee based on the performance of your investments. While this can align their interests with yours, it’s less common due to regulatory considerations and potential conflicts of interest.
You can read some more about other fee types including financial product fees here.
The Hidden Cost of Not Seeking Financial Advice
While financial planning fees may seem like an added expense, it’s essential to consider the potential costs associated with not seeking professional advice. Here are some common scenarios where the absence of guidance can lead to significant financial setbacks:
1. Tax Inefficiencies: Paying More Than You Should
Effective tax planning is a cornerstone of financial success. Without proper advice, you could be missing out on valuable deductions, offsets, or tax-effective strategies. For example, structuring your investments without considering tax implications can result in paying unnecessary capital gains tax or missing opportunities for tax-free or tax-deferred growth.
A financial planner can help you take advantage of strategies such as salary sacrificing, contributing to superannuation, or investing through tax-effective structures like trusts. Without this guidance, the amount lost to inefficient tax management over the years can far exceed the cost of professional advice.
2. Poor Investment Decisions: Risk of Underperformance
Investing without professional guidance can lead to poor decision-making, such as chasing high-risk investments without understanding their suitability or missing out on opportunities for diversification. Emotional investing, reacting to market volatility, or failing to review and rebalance your portfolio can significantly reduce your long-term returns.
A financial planner can develop a tailored investment strategy aligned with your risk tolerance, time horizon, and financial goals. They also provide discipline and oversight to help you stay the course during market fluctuations, ensuring you make decisions based on a sound strategy, not emotions.
3. Procrastination: The Cost of Delayed Decisions
Procrastination is a silent wealth killer. Delaying decisions like increasing your superannuation contributions, purchasing insurance, or starting a savings plan can cost you dearly in the long run. The sooner you start planning and investing, the more you can take advantage of compounding returns.
A financial planner can help you overcome the inertia of indecision by setting clear, actionable steps to achieve your financial goals. This proactive approach ensures you’re not left playing catch-up when life events or retirement come around sooner than expected.
4. Missed Opportunities: Failing to Capitalise on Strategies
Whether it’s using a transition-to-retirement strategy, implementing debt recycling, or taking advantage of concessional and non-concessional super contributions, failing to capitalise on strategic opportunities can lead to thousands of dollars in missed gains.
Financial planners stay up-to-date with changing regulations and opportunities, ensuring you’re always positioned to take advantage of available strategies to optimise your wealth.
The Real Value of Professional Financial Advice
It’s important to view financial planning fees not merely as a cost, but as an investment in your financial future. Professional advice offers:
Clarity and Confidence: A clear plan tailored to your personal financial situation provides confidence and reduces anxiety about your future.
Strategic Advantage: With expert guidance, you can navigate complex financial landscapes, take advantage of available strategies, and avoid costly mistakes.
Time and Peace of Mind: By handling your financial affairs, planners free up your time, allowing you to focus on what matters most—whether that’s your career, family, or personal pursuits.
How AGS Financial Group Can Help
At AGS Financial Group, we offer a transparent fee structure, in line with the figures mentioned above. In all cases, we ensure that you know in advance what costs you’ll be facing, putting you in charge. Our team of experienced financial planners is committed to helping you build a secure financial future by providing tailored advice and ongoing support that more than makes up for any fees being charged.
Ready to make informed financial decisions? Get in touch with one of our financial planners today to learn how we can help you maximise your wealth and achieve your financial goals.