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Is it worth paying for a financial adviser?

With the price of everything going up these days including financial advice, it has to be asked if it’s worth paying for financial advice.

Financial Advice
Is it worth paying for a financial adviser?


With the price of everything going up these days including financial advice, it has to be asked if it’s worth paying for financial advice.

First of all, let’s discuss the average price of financial advice. There are a number of surveys done and information gathered from industry participants but typically the price of initial advice provided by a financial adviser to a couple is $3,500.

So what do you get for $3,500 and is it worth it?

Financial advice is provided to you in writing through a document called a statement of advice (SoA). A statement of advice is formulated based on discussions with you and research completed by the Financial Adviser and his team, typically this involves a Financial Planning Assistant and a Paraplanner. The information required to complete a statement of advice typically involves two meetings or lengthy discussions with a Financial Adviser.

A statement of advice outlines what exactly is needed to achieve your financial goals.

As an example, a common goal is for someone to retire at age 65 on an income of $50,000 per annum.

A statement of advice will show you what’s required to get there and will have the projections to prove that it’s achievable. The advice will show you what practical steps are needed and the projections will show you that your goal is achievable if the advice is followed. It is also important to remember that everyone has different goals and different starting points financially, so every statement of advice is tailored to you specifically.

A third meeting is held to present the statement of advice and to sign any applicable paperwork. Once you agree to proceed with the advice recommendations, the Financial Adviser and his team will ensure that the advice is implemented such as setting up any necessary super funds, ensuring that your super contributions are directed to the right place, and investing your funds accordingly.

So the $3,500 covers the advice in writing, as well as the implementation of the advice.

Let’s answer the question. Is financial advice worth paying for?

Like anything in life, you can always do it yourself. You can find a suitable super fund for yourself, set it up, direct your super contributions to it, and also choose your own investments as you wish. You can even use a spreadsheet or calculator to determine how much super balance you require when you retire and if the amount you accumulate at retirement age is sufficient to last you a lifetime.

The truth is, of course, that nearly nobody does this themselves as it takes considerable time and involves complex laws and rules. If you break those laws or rules there can be considerable financial penalties. And if people do try and attempt to do it themselves, they do not have the confidence that they’re correct and are heading in the right direction.

Paying an Adviser is therefore very convenient from a financial and time point of view.

More importantly, it also gives you peace of mind for when you pay for a statement of advice and its implementation, there are guarantees that the Financial Adviser is working in your best interests as legislated by law. Any calculations are based on long-term averages. The advice by law will be in your best interests and will definitely help you reach your goal by showing you the steps required to get you there.

It’s impossible to put a price on “peace of mind” and knowing that a job is done correctly. But when paying for financial advice this is essentially what you’re paying for – an Adviser’s financial planning expertise and experience in dealing with a broad range of clients.

A similar example is looking after your car. You can service it yourself and check it regularly however paying a mechanic gives you the peace of mind that it’s done correctly. Financial advice is exactly the same: you receive peace of mind and you know that it’s done correctly.

Here are a few areas where paying for financial advice can certainly pay off from a financial point of view. The facts and figures are taken from the 2021 Russell Investments value of an adviser report and illustrated in percentage terms.

Need more proof?

Russell Investments has calculated that an Adviser can help you be 5.2% better off each year. So if you had $300,000 in superannuation and paid an Adviser for advice you would be better off by $15,600 per annum.

Here’s how they calculate it.

Asset allocation. Getting the right mix of cash shares and bonds and managing this adds 1.1% per annum value to you as a client.

Behavioural coaching. When you are emotionally attached to your money, you can make the wrong decisions. Behavioural finance is an important part of understanding how individuals act or react to certain financial situations. A Financial Adviser can take out the extreme emotions when coming to finance and add 2% per annum of value to you as a client.

Cash optimisation. In times of stock market volatility, having too much cash or too little cash can cost you. Having too much cash in times of high inflation can rob you of future purchasing power. Getting the correct amount of cash on hand can add 0.6% per annum value to you as a client.

Tax effective planning. Although not Accountants, Financial Advisers understand tax laws and strategies around investing and contributing to super which can be very advantageous from a tax perspective. Tax-effective planning can add 1.5% per annum value to you as a client.

The full report can be accessed at Russell investments but the calculation of 5.2% per annum increase in wealth is certainly an incentive to engage a Financial Adviser.

If you’ve been considering whether paying for financial advice is worth it, hopefully, this article has helped you see the benefit.

For more information and to book a free initial consultation, do not hesitate to contact us at Valley Mayfair Wealth Management.

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