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$4k comprehensive advice fee the new bar for viability

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14 May 2025 by Beata Kuczynska, Professional Planner

Article link: https://www.professionalplanner.com.au/2025/05/up-to-4000-annual-client-fees-needed-for-business-viability-ardata/

Advice firms need to charge between $3000 to $4000 to remain viable, despite most Australians only willing to pay $500 for financial advice.

The latest Adviser Ratings Musical Chairs report found 67 per cent of unadvised Australians would pay only $500 annually for financial advice with only 6 per cent willing to pay current market rates.

Furthermore, the report noted there is an average annual “mandatory” cost of $449 per client, ranging from $36,896 to $83,877 per adviser, further putting the $500 advice cost out of reach.

The mandatory costs include licensee services, professional indemnity insurance and the ASIC levy, but the report excluded the Compensation Scheme of Last Resort levy which is expected to blow out in the coming financial years.

Despite the low price expectation, which is even lower than a similar finding from Investment Trends (that unadvised Australians are willing to pay $580 for advice), the Adviser Ratings report found 68 per cent of Australians recognise the value of professional financial guidance.

However, industry consultant Ben Marshan tells Professional Planner an interest in advice does not equate to truly valuing its worth.

He says the 67 per cent who said they would pay only $500 annually don’t understand what advice is and what it costs to produce it, thereby not accounting for the hidden costs to the adviser.

“They look at [advice] in comparison to going to the doctor and getting a health checkup and have got that expectation $500 seems like a reasonable price to pay without understanding what goes into it and how much the benefits of it are,” Marshan says.

The report’s findings show the price of advice reflects the mandatory regulatory costs that have transformed the economic element of advice delivery.

As a result of these costs, clients have to pay more to receive advice in order for the advice practice to remain profitable and sustainable.

Marshan says there’s a disconnect between what Australians expect from advisers and what the reality is, and part of the reality is the regulatory obligations advisers must operate under.

The report also found the accessibility gap due to advice being too expensive for many potential clients has social implications beyond the individual. It referenced research from UNSW academics Jerry Parwada, Natalie Oh and Eugene Wang which characterised advisers as “unsung guardians” in reducing fraudulent activity.

Areas seeing higher adviser attrition have shown 8.8 per cent more incidents of fraud, as they represent protectors and act as fraud deterrents. The findings emphasise the advice industry’s social responsibility and the impact the lack of access to advice could have on a community.

Only 22pc FAR accredited ahead of 2026 deadline

The report urges advisers to ensure their ASIC Financial Adviser Register records accurately reflect their qualifications or their experience pathway status as currently only 22 per cent of registered advisers are definitively positioned to meet this deadline.

This leaves approximately 12,000 advisers who must update their records or potentially lose their “existing adviser” status and consequently their eligibility to practice.

The adviser would then have to complete a bachelor’s degree, pass the adviser exam and then undertake a professional year before being allowed to practice again – and during this time they would be unable to earn income as an adviser.

The initial deadline to complete the education standard was pushed back under the former Coalition government in 2020 and advisers now have until the end of the year to complete a relevant degree, unless they are exempt due to the 10 year experience pathway.

According to the report, approximately 7800 advisers meet the experience pathway and 1085 advisers entered the profession after FASEA implemented the professional standards obligations in 2019 and therefore meet current requirements.

The research found approximately 4100 advisers with six to 12 years of experience did not qualify for the experience pathway and must complete their education requirements and have them recorded before the deadline.

“I would hope that for most of that around 4100 it’s just a matter of putting the paperwork in and having their licensee update the records,” Marshan says.

“There’s a question about how many of them still have outstanding education to complete, which is an unknown at this point.”

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