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How much does a financial advisor cost?

A financial advisor is a professional who can assist with all manner of requirements, from planning budgets and investments, advising on tax strategies and products, and assisting with funding emergencies. Typically, a financial advisor will cost between £100-£300 per hour or a percentage of 1-2.5% of the value of the project.

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What is a Financial Advisor?

A financial advisor does just that; they give financial advice to their clients. This can cover a vast spectrum of requirements, and some financial advisors will have specific market niches or types of finance that they specialise in.

The advice and information provided by a financial advisor is tailored to your specific requirements. For example, if they were advising about an investment portfolio, they would work with you to understand your appetite for risk, your aspirations for your portfolio performance, and what sorts of investment you are most comfortable with.

Having a financial advisor on your side can be a productive asset in making informed decisions and keeping firm control of your finances.

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How Much Does a Financial Advisor Cost?

The cost of using a financial advisor will vary significantly depending on the task at hand. Some people might use an advisor to help them with a particular problem or investment, and others might pay a retainer to have a financial advisor on hand for periodic assessments or consultations.

Some advisors will charge a fixed fee for a particular task - such as setting up an ISA. Others may charge a percentage of the value of the project in question, which is usually around 1-2.5%.

If you work with a financial advisor to carry out a reasonably small one-off task, they may offer an hourly rate. This tends to be between £100 and £300 per hour. Experienced advisors and those in London and the southeast tend to be at the higher end of the spectrum.

What Does a Financial Advisor Do?

Financial advisors are finance experts. It is essential to establish whether your financial advisor is an independent professional or acting on behalf of a company or brand.

To ensure that you are receiving independent advice, you should look for a registered independent advisor with one of the accreditation bodies.

A financial advisor can offer a variety of assistance, with issues such as:

  • Investment decisions
  • Tax planning
  • Short-term finance needs
  • Long-term financial planning

Given that everybody has unique goals and requirements from their finances, a financial advisor will almost always need to meet to discuss your funds and what you wish to achieve.

Usually, the first step of working with a financial advisor is to have a meeting to fact find. They will ask for details about exactly what your financial circumstances are, what you wish to achieve, and your businesses or employment to be able to assess your situation.

They can explain what types of services they offer, and provide professional recommendations about the potential risks and benefits of different courses of action.

An independent financial advisor can recommend specific products and even make investments or transactions on behalf of their clients when instructed to do so.

Why Do People Use a Financial Advisor?

Finance professionals can help with lots of different scenarios. They are often used by affluent people who need tailored advice to make the best investment decisions, but also work with people who need one-off information, or help with planning for a significant expense or life event.

Some of the circumstances in which people choose to work with a financial advisor include:

  • Planning for retirement
  • Needing independent investment advice
  • Budgeting for university or education fees
  • Restructuring finances or assets
  • Assessing budgets and ongoing financial management
  • Planning for lifestyle changes

Many financial advisors will provide support across the spectrum of financial services, and others will be specialists in a specific niche. For example, a financial advisor might be a retirement planning specialist or a risk management expert.

If you are investing through a financial advisor, or they are managing your portfolio of assets, you are most likely to work on a percentage commission basis.

This includes the ongoing management and monitoring of your investment performance and regular updates. Your financial advisor may recommend making changes to your portfolio where they see new opportunities or risks emerging.

For financial advice specific to running businesses, be sure to take a look at our pages on small business accounting costs and payroll costs to find out more about the different cost factors.

What Types of Financial Advisor are there?

You may find that there are lots of finance professionals with different accreditations, and need to understand what these mean.

The most crucial factor to look out for is independence. Some professional advisors are affiliated with a particular bank or organisation, and so cannot provide fully independent advice since they are restricted to a limited range of products.

Professional financial advisors can be either independent or restricted and restricted means that your advisor must explain the limitations on the services they can offer.

Specialist advisors may not call themselves a financial advisor - for example, a mortgage expert may be called a mortgage advisor.

Private wealth managers work as personal financial advisors, representing wealthy individuals and helping with their investments. This type of private banker will manage a client's portfolio and usually works with a team of accountants and financial analysts to provide a bespoke service. Find out more about wealth manager fees.

What Accreditations Should my Financial Advisor Have?

You may find that there are several professional bodies that financial advisors are accredited to. All of these designations are professional certifications and indicate a registration with an accredited institution.

Formal accreditations can be verified with the affiliated body, so if you would like to check your financial advisors' credentials, you can request this from their registered professional organisation.

These include:

  • Certified Financial Planner (CFP)
  • Chartered Financial Analyst (CFA)
  • Chartered Financial Consultant (ChFC)
  • Chartered Investment Management Analyst (CIMA)

What are the Benefits of Using a Financial Advisor?

Financial advisors can help with lots of decisions; from ongoing wealth management to choosing the right mortgage or planning for a life event.

Some of the benefits of using an advisor include:

  • Effective planning for the future - a financial advisor will help to map out your requirements and budget for them accordingly.
  • Professional product advice - your advisor will be able to provide independent information about the most attractive investments, products, and rates available on the market.
  • Time-saving - if you make regular investments but don't have time to monitor your portfolio continually, your advisor will manage this workload for you.
  • Cost savings - by having a finance expert assess your plans, you can often achieve higher returns on investments and save money on interest fees and costs.
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Frequently Asked Questions

What is the Difference Between a Financial Planner and a Financial Advisor?

With different terminology, it can be challenging to understand the difference between finance professionals and to know who might be best suited to meet your needs.

A financial planner provides long-term support to achieve your goals. They can work for individuals, companies or families.

A financial advisor covers a broad range of services and can provide planning advice or short-term advice about managing your finances and investments.

In What Scenarios do People Hire a Financial Planner?

There are lots of reasons that you might decide you need independent help with your money.

Some of the most common reasons for hiring a financial advisor are:

  • Help with wealth management: investors often choose to hire a financial advisor to manage their portfolio, and wealthy individuals will benefit from tax-efficiency planning and estate management services.
  • Help with a self-employed business: many sole traders need assistance with keeping their accounts up to date, budgeting for retirement savings and things like PAYE.
  • Help with retirement: core clients for financial advisors are people looking for assistance with retirement planning. A financial advisor can calculate the budget you need, how much income you will receive, and how to structure your investments to meet the resulting gap.
  • Help with lifestyle changes: whether planning for a wedding, sending a child to university or having a new baby, lifestyle changes can have a significant impact on your finances. A financial advisor can help budget and plan effectively for life events, including things like advising on the most suitable insurance to have in place.

Is an Investment Advisor the same thing as a Financial Advisor?

Both investment advisors and financial advisors help people with managing their finances, but an investment advisor is a specialist in investments, as the name suggests.

They work with clients to choose investment products, put in place insurances, and assess their ongoing risk exposure.

Usually, an investment advisor will charge a percentage of the value of the portfolio or a commission based on the growth in value.

They can also advise on tax-efficiencies available, and the best way to structure investments.

Can a Financial Advisor Save Me Money?

Quite possibly! While the fees for a finance professional are not low, there are lots of ways in which a financial advisor can save you money as well as deliver peace of mind.

Some of the ways in which financial advisors can save you money include:

  • Recommending pension schemes to plan for your future.
  • Advising on the best products - such as mortgages and insurances.
  • Sourcing products for you with lower fees and better interest rates.
  • Advising on the most risk-averse investment decisions.

What is the Best Fee Structure for my Financial Advisor?

How you pay fees to your financial advisor will depend on lots of factors, such as how long you wish to work with them for, and what sort of advice you are hiring them to receive.

Fixed fees have the benefit of being a set value that you can budget for. It is advisable to have a fixed fee service confirmed in writing, so you have clarity about what this charge does and does not include. Fixed fees are most appropriate for one-off tasks such as setting up an ISA or an annuity.

Percentage fees usually apply for ongoing work such as managing an investment portfolio. This means that your financial advisor will earn more, the more they grow the value of your investment portfolio.

Hourly rates are usually applied for small, quick jobs rather than ongoing work. The UK average hourly rate is £150, but this can range from £100 to £300. It is best to have an estimate in advance as to how long the work is expected to take. Examples of tasks suitable for an hourly rate are short-term work such as moving an investment for you.

What are the Rules about Fees for Financial Advice?

All accredited financial advisors will work to a set of guidelines and regulations that set out how they conduct their business.

Your financial advisor will need to advise you upfront about what their fees will be, and provide an estimate where the exact amount payable for a service is not defined.

Some advisors - such as mortgage brokers - may charge you an upfront fee for their advice. In contrast, other financial advisors may make their income in the form of introducers fees, paid to them by the provider of the financial product they recommend.

What are Non-advised Sales?

If you have purchased a financial product without independent advice, you may have been asked to sign a disclaimer form or to tick a box stating that you have sought out independent advice before purchasing a product.

This is because there are strict rules about financial advice, and banks and building societies will need you to self-certify that you have received all the information you need to make an informed decision before buying a financial product.

Banks need to be cautious about explaining a list of products to you and then leaving it to you to decide which product to buy. This is a non-advised sale; whereby your broker or bank will not have given you specific advice about which product to choose and you are responsible for the decisions you make.

An advised sale is where you have received independent recommendations about which products are best suited to you, and made your decisions based on that professional advice.

The distinction is important because if a professional advisor recommended you a product, and the outcome ended up being unsuitable, you might potentially have a case for claiming that the product had been mis-sold.

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