Initial Meeting
Usually there is no fee for the consultation meeting with the financial adviser. In this meeting, the adviser will be able to provide fees and charges of your particular requirements. If the requirements still have to be determined then ask for an estimate. The amount should not be as a percentage of what you need to invest.
Statement of Advice (SOA) Fee
The SOA fee formally layouts the advice given to you including the strategies and the investments. The fee is on the cost of preparation that is billed to you or it can be deducted, if you permit such deduction, from the balance of the amount to be invested.
The cost of the advice will really depend on scope of the service. As a ball park figure it is between $200-$700 for basic services and $2000-$4000 for a more complicated advice. If you have agreed on an ongoing advice, some cost can be paid over time.
For those involving insurance, the SOA will be paid commissions by the insurance company.
Should you decide not to pursue the financial advice, you only have to pay for the preparation of the Statement of Advice to be agreed prior to any implementation.
Implementation Fee
In some cases, there are implementation fees for any administration work. This happens when you decide to go with the financial advice.
The fees depend on you negotiation with the financial adviser and different options can be agreed upon.
You can either pay upfront or the cost can be deducted from the investment.
The Ongoing Advice Fee
If you agree on an ongoing advice, it is vital to understand what is included in the services:
► regular newsletters
► regular reports on your investment portfolio
► regular reviews with your financial adviser
► invitations to seminars, workshops, etc.
Those who are in this kind of business usually have options that a client can choose from. The service will depend on the plan and scaled accordingly. For example, a “Gold” plan will have all service options while a “Bronze” plan will only have a few.
It is usual practice to charge an implementation fee should you want to change after a review of your financial standing.
Once you have decided to go for an ongoing financial advice service, an annual fee disclosure statement will be given to you. This will state the annual fees you have to pay, the services you will receive as well as other services that go with the options you have chosen.
Ending your relationship with a financial adviser
Ending the relationship with your financial adviser can be a stressful matter and should have some considerations before doing so.
Some products are tied to a financial adviser. Even if you do not want the service anymore, the product may be accessed only through the financial adviser. So consider this first before anything else. The alternative to this is getting another adviser who can have access to the product.
Other implications of such move are:
- selling and buying costs
- changes to any assistance you might be getting
- being out of the market
- income and capital gains tax
The bottom line is this – if you have to leave a financial adviser or get another investment, be sure that your are satisfied with the product and what you are getting from it.