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Advice fee rises on the horizon

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8 December 2022 by Laura Dew, Money Management

Article link: https://www.moneymanagement.com.au/news/financial-planning/advice-fee-rises-horizon

Over 90% of advisers say they plan to increase their fees next year, according to Adviser Ratings.

This was the result of rising costs related to compliance, insurance and staffing expenses as well as the wider inflation rise which is expected to peak at 8%.

Median advice fees had risen 8% since last year and had risen 40% since 2018.

Data from the firm’s Adviser Landscape Report showed the median advice fee was $3,529, rising to a maximum of $12,000 in 2021. This was up from a median of $2,510 in 2018.

Just 7% of respondents said they expected to keep their fees at their current rate.

This need to increase fees was also making firms more selective on the clients they worked with in order to remain profitable. The average fund under administration per client was now $785k, up from $643k in 2018.

However, earlier research from the company found most consumers felt advice was already unaffordable and three-in-five would only pay up to $500 to see an adviser.

This figure was still $300 higher than the minimum advice fee in 2021 which was $800.

Only one-in-20 would pay between $2,500 and $5,000, a figure more reflective of current fee pricing.

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