HOW DO FINANCIAL PLANNERS CHARGE FOR THEIR SERVICES?
A financial planner will generally charge a flat dollar fee for the initial advice provided. This may range from $500 to $10,000 depending on the complexity of your financial situation and the complexity of the advice provided. However, the majority of advice pieces will cost between $2,500 and $4,000 for relatively comprehensive advice.
A financial planner may also charge you an ongoing fee for service. This will either be a flat dollar fee per month, or a fixed percentage fee calculated and levied on the value of your investment portfolio.
Changes under FOFA (future of financial advice legislation)
Since 1 July 2013, financial planners are banned from receiving commissions on financial products (excluding personal life insurance policies) or financial product advice given to a retail client. In fact, financial planners are now banned from receiving any form of conflicted remuneration. This means they are banned from receiving any type of remuneration (monetary or otherwise) from a financial product provider that could reasonably be expected to influence the financial product recommended or the advice provided.
However commission 'arrangements' entered into before 1 July 2013 are grandfathered (preserved) provided that a client established an account with the product provider before 1 July 2014. This means that many financial products sold before 1 July 2014 still have commissions attached.
The changes implemented under FOFA do not ban percentage-based entry fees on financial products from being charged by product providers or financial planners, provided clients give their express consent to the entry fee being paid to the financial planner, and the exact size of the entry fee is disclosed and acknowledged.