About 93% of financial planners intend to increase their fees next year, while funds under advice steadily rises.
This was according to a poll released by Adviser Ratings which also showed that the median advice fee increased 8.4% from that last year and up 40.6% from that in 2018.
The median advice fee in 2018, 2019, 2020 and 2021 rose from A$2,510 (US$1,684) to $2,800, $3,256 and $3,529, respectively, said research by Adviser Ratings’ 2022 Australian Financial Advice Landscape Report.
At the same time, average funds under advice per client has increased 22% between 2018 and 2021, from $643,000 to $785,000.
While most surveyed Australians (63%) would like to see a financial adviser, most also say they could not afford to at the current price, research by Adviser Ratings showed.
In fact, more than three-in-five prospective clients would not 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 would pay up to $2,500 a year, while one-in-20 would pay between $2,500 and $5,000, according to.
Meanwhile, in an earlier report, Padua Solutions attributed the rapid increase in the cost of advice to rising regulatory costs.
Initial advice fees charged by advisers on a per-advice-document basis increased 16%, from $2,859 in FY21 to $3,315 in the past financial year, data compiled into the ‘Padua Advice Fee Data Report’ for FY22 showed.
Ongoing advice fees saw an even larger increase of 33% from $3,656 in FY21 to $4,865 in FY22.
Padua Solutions co-CEO and co-founder Anne-Marie Esler said data like this showed why cost is frequently cited as the main reason Australians are not seeking advice.
“Especially when advice fees can rise by more than double the current rate of inflation,” Ms Esler.
The report used the advice data from the approximately 5% of the financial advice market that use Padua’s software and services.
Ms Esler noted the rise of fees has been due to the regulatory burden on financial advisers which has required them to devote more time making sure advice documentation adheres to compliance standards.
She added the industry losing 12,000 advisers since 2019 has heaped further pressure on the sector.
“The mass exodus of advisers from the financial advice industry has only exacerbated existing concerns around the cost and accessibility of advice,” Ms Esler said.
The firm noted the impact the Quality of Advice Review could have in reducing the cost of advice if the proposals from the review are passed.
“If we as an industry don’t work towards reducing the cost of providing advice, it will become increasingly inaccessible for most people, and especially those who would potentially stand to benefit most from financial advice,” Ms Esler said, reported Professional Planner.