‘We pay $2K a year for financial advice but is that good value or not?’

Q. My husband and I receive the full Age Pension and we also draw a small amount from his superannuation investments each month. We have been advised by our bank that they are no longer providing this service, but have been contacted by our recent financial adviser, offering his services. We are wondering if ,indeed, we do need the services of a financial adviser at all. Our investments total around $250,000. In all we have been paying around $2,000 per annum and we feel that this has been excessive. What are your thoughts?

A. This is a very good question. If you feel that the fees charged by your adviser are excessive it means that you do not see enough ‘value’ in the relationship. This means you either have the wrong adviser or he has not been able to demonstrate the value he is adding. By industry standards, an annual fee of around 1 per cent of the assets being managed for financial advice is not unusual. But by no means does that suggest that it is the correct fee.

I firmly believe that financial advisers can provide a valuable and highly effective service, however, the level of regulation makes it very difficult to provide advice that complies with the law for much less than $2,000. If you have a good relationship with your adviser you should discuss the level of fees and perhaps ask him to amend his service arrangements to reduce the costs.

Alternatively, you could ask a friend or family member for recommendation to see another adviser. You should be upfront about your concerns with fees and make sure that you are convinced that you are receiving value. A $2,000 fee could, in fact, be very good value if you receive the right level of service in your circumstances.

If you have a question for Starts at 60’s money experts, email it to [email protected].

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.