Q. “I am retired and rely on an adviser to look after my self-funded super portfolio, which consists of managed funds and shares that I had a hand in choosing. I have always thought the fees charged by the platform provider and the adviser’s monthly fee as being excessive, but as a ballpark figure, what sort of fees should I expect to pay on $500,000 invested? The adviser and I meet maybe one to two times a year for an update and he invites me to a market update where a fund manager will provide insights on how the world economy is impacting our portfolios. These updates last for about an hour – and they do supply finger food.”
A. If you feel fees are excessive, it usually means you do not feel you are getting value for the outlay.
If you are otherwise happy with your adviser, the first step should be to see if they will reduce fees. Many advisers charge fees as a percentage of the assets they manage rather than a fee based on the complexity of the job they do. But different clients have different needs and the fee should reflect those differing needs.
I have found that over time as clients’ circumstances change and their affairs become less complex, the fees should reduce accordingly. A one-size-suits-all approach to fees for all clients is neither reasonable nor appropriate. Fees for advice across the industry vary substantially. A fee of around 1 percent of assets, which in your case would be around $5,000, would not be unusual. However, in my view, if your affairs are straightforward and you are only meeting with your adviser once per annum, a more reasonable fee would be around $2,000 to $3,000.
Also, the costs charged by large investment platforms are now under pressure given the recent announcements by Westpac/BT to substantially reduce the costs of their platforms. You should ask your adviser if there is a more cost-effective platform offering available to you. I trust, however, the finger food is up to scratch.”
Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.