"I am interested in getting advice to look at my overall financial situation, but I’m confused by complicated advice fees.
Can you explain what to expect generally in regard to fees and anything I should look out for?"
-Emma
Top answer provided by:
Michael Coorey
Advice fees should be based upon the complexity of what needs to be done by an adviser to help you achieve your desired financial and lifestyle goals. The adviser you choose must spend time getting to know you, find out what’s important to you, what keeps you up at night and what you want your desired financial journey looks like. It’s akin to planning a lifelong trip or journey, where your goals are your stopovers, and your end destination is your retirement (or when you would like working to be a choice). Once this information is gathered, the adviser should provide you with a letter known as a “Terms of Engagement” (ToE).
This first part of the ToE outlines what they understand to be your goals (their timeframe, cost and your priority) and what is important to you. The next part outlines what areas of advice the adviser believes necessary to help you achieve your goals. For example, you may require a strategy or strategic advice (your travel itinerary), financial protection (your travel insurance), cash flow advice/coaching (your spending money and how to manage it), superannuation advice – contribution and investment strategy (your spending money for your end destination).
The final part of the ToE is the fee section which should clearly outline, in dollar terms, what you need to pay for the advice. Typically, you will pay for the Statement of Advice (your detailed itinerary) as a lump sum (like paying an architect who has helped you design your financial house). This fee usually includes the implementation of your advice - buying your tickets, booking your accommodation and day trips and seeing that you get on the right plane on time!
Any ongoing assistance your adviser thinks you may need to help you stay the course and heading in the right direction will be stated as your ongoing service fee (ongoing travel assistance for flight changes that may result from changes in your goals, situation or other external happenings, such as budget changes that may impact you and bump you off course. Just like a pilot, who makes detailed flight plans before departure and has to adjust their direction if they encounter bad weather. These fees are usually charged monthly.
You may have noticed that I have not mentioned any prices for the advice. This is because the advice fees should be tailored to your own specific goals and requirements. There should be no requirement for you to commit to any fees until you are comfortable with the adviser’s proposal and with them on a personal level, as the relationship with your adviser is central to achieving your desired outcomes over the long term.
I hope this help!
Kind regards,
Michael
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