New Year, New Prices: Fees To Soar Again In 2023

A whopping 93 per cent of advisers say they plan to increase their fees next year, a new Adviser Ratings poll shows.

As Treasury, professional bodies and the industry at large explore how to improve affordability in advice, practices continue to feel the crunch of rising costs, with compliance, insurance and staffing expenses biting into revenue and profitability.

While increasing costs have been an issue for advice firms for several years, practices are now also dealing with general inflation, which the Reserve Bank tips will peak at 8 per cent in the December quarter.

Last year, the median advice fee increased 8 per cent and since 2018, it has risen more than 40 per cent, Adviser Ratings data shows.   

Figure 1 – Average and median fees: 2018-2021



Source: Adviser Ratings' 2022 Australian Financial Advice Landscape Report

At the same time, average funds under advice (FUA) per client has increased 22 per cent between 2018 and 2021.

Figure 2 – Average FUA per client: 2018-2021



Source: Adviser Ratings' 2022 Australian Financial Advice Landscape Report

A growing gulf

Many practices say increasing fees in the new year is a necessity; that’s likely to have further affordability consequences for clients and would-be clients.

With the profession’s numbers now below 16,000, there are fewer referral pathways for clients who have been orphaned by their adviser. While almost half of the businesses we’ve surveyed in the past year are looking to expand their client base, operating conditions and profitability pressures are making them more selective in the types of clients they target.

Adviser Ratings consumer research found that while most surveyed Australians (63 per cent) would like to see a financial adviser, most also say they couldn’t afford to at the current price. In fact, more than three-in-five prospective clients wouldn’t pay more than $500 to see an adviser – about a seventh of the median fee last year.

Just one-in-10 Australians who want advice say they’d pay up to $2500 a year, while one-in-20 would pay between $2500 and $5000, our research found.

We know affordability is on Treasury’s radar, with a raft of changes recommended in the Quality of Advice proposals paper, including scrapping Statements of Advice and simplifying disclosure requirements.

A Financial Services Council and KPMG whitepaper states that advice could be delivered for up to 40 per cent less with a combination of regulatory and technological changes.

Research from our most recent Landscape Report shows top priorities for businesses include addressing material process inefficiencies, along with IT solutions and adviser recruitment.

As we await what’s to come from the review, currently only 7 per cent of advisers say they’re planning on keeping their fees the same in the next year.

To deliver our market-leading insights, we rely on Australian advisers and practice heads to describe their experiences with fees, financial products, industry service providers, clients, and sentiment from the past year. We use this valuable information to to help advisers navigate rapid industry changes and to offer other parts of the ecosystem an understanding of what advisers want and need. We’d love for you to be involved.

To participate in the 2023 Adviser Ratings Landscape Survey, receive your exclusive regional report and go into this year's $35k prize draw, ENTER THE SURVEY HERE

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