Last week I sat down with a friend who had just received his annual adviser statement. His face said it all before he even spoke. “They took £18,400 last year,” he muttered. His portfolio? £620,000. That’s almost 3% gone before the market even moved. He felt sick. And honestly, so did I.
It’s a conversation I’m having more and more often. With frozen tax thresholds, volatile markets, and the constant threat of new rules around pensions and inheritance tax, people are running to advisers in droves. But are we paying 2025-level desperate enough to hand over huge chunks of our wealth every single year?
The Real Cost of Financial Advice in 2025
Let’s cut straight to the numbers, because that’s what actually matters when it’s your money on the line.
Recent regulatory data shows that initial advice fees typically range from 1% to 2.9% of the amount you’re investing. Ongoing annual fees sit between 0.4% and 0.9% for most firms – though plenty quietly charge 1% or even more when you add in platform costs and “discretionary management” extras.
On a £500,000 portfolio, that’s £5,000–£14,500 upfront and then £2,000–£4,500 every single year afterwards. Forever. Or at least until you run out of money or fire them.
Those numbers aren’t made up – they come straight from the thousands of advice firms reporting to the regulator. And yes, some really do charge the upper end without blinking.
Independent vs Restricted – Does It Actually Matter for Price?
You’ll often hear that independent advisers are more expensive because they can choose from the whole market. The surprising truth? The data says pricing is almost identical.
Whether the firm is fully independent (87% of the market) or restricted (12%), the fee bands are broadly the same. The difference usually comes down to the individual business model, not the label on the door.
Restricted doesn’t automatically mean “worse” either. Many restricted firms have carefully curated shortlists, and some bank-based advisers are restricted by definition. What matters far more is transparency and whether the advice actually fits you.
The Three Main Ways Advisers Charge (And Which Hurts Most)
- Percentage of assets (ad valorem) – The most common – and potentially the most expensive over time.
- Fixed fees – You know exactly what you’ll pay regardless of portfolio size. Rare, but growing.
- Hourly or project-based – Common for one-off pieces of work like cashflow planning or IHT reviews.
Here’s why percentage fees can sting so badly in the end.
Imagine you invest £500,000 and pay 2% initial (£10,000) plus 0.8% ongoing (£4,000 a year). Over 20 years, assuming 5% average growth and no withdrawals, that single decision costs you over £220,000 in fees. That’s real money that could have compounded for your children’s inheritance or your own retirement.
“A good adviser does far more than pick funds. They stop you selling at the bottom, optimise your tax wrappers, and build proper cashflow forecasts. That hidden value – sometimes called ‘adviser alpha’ – can genuinely be worth several percent a year.”
Chartered financial planner, London
When Is Paying 1%+ Every Year Actually Justified?
In my experience, there are really only four situations where ongoing percentage fees make sense:
- You have a complex tax issues – carry forward, VCT/EIS, business relief, trusts, offshore bonds, etc.
- You’re in or near decumulation – working out sustainable withdrawal rates is genuinely hard.
- You’re behaviourally hopeless – you panic-sell or greed-buy without someone to hold your hand.
- Your portfolio is truly bespoke – lots of direct equities, private assets, or currency hedging.
If none of those apply to you? Then paying 0.8–1% a year for an annual review and a standard platform portfolio is, frankly, hard to defend.
The Rise of Fixed-Fee and Hybrid Models
Something interesting is happening in the background. A growing number of newer advice firms (especially the chartered ones aimed at professionals in their 30s–50s) have ditched percentage fees completely.
Typical fixed-fee structures I’m seeing:
| Service | Typical Fixed Cost |
| Full financial plan (one-off) | £2,500 – £5,000 |
| Annual review & rebalancing | £1,200 – £2,500 flat |
| Ongoing “light-touch” retainer | £150 – £350 per month |
| Hourly advice as needed | £200 – £350 per hour |
Suddenly the maths looks very different. Even on a £1 million portfolio, you might pay £3,000–£4,000 a year total – a fraction of the traditional 1% model.
How to Tell If You’re Getting Value (The Checklist I Use With Clients)
Run through this honestly. If your adviser fails more than two, it’s time for a serious conversation.
- Do you receive a proper cashflow forecast updated at least annually?
- Have they saved you significant tax in the last 3 years (not just “used your ISA allowance”)?
- Do they proactively contact you with ideas, or only when it’s review time?
- Can you clearly separate adviser, platform, and fund charges on every statement?
- Have they ever talked you out of a bad decision that would have cost you money?
- Do you genuinely understand your portfolio and feel in control?
If the answer is mostly “no”, you’re paying for a comfort blanket, not genuine expertise.
What About Doing It Yourself?
Let’s be real – for many people with £100k–£500k in straightforward ISAs and SIPPs, a cheap platform (0.25% or less) plus a global index tracker is perfectly adequate. Add in Vanguard’s free cashflow tool or ProjectionLab, and you can replicate 90% of what most advisers actually do.
The bit that’s hard to DIY? The behavioural coaching and the complex tax planning. Everything else is increasingly commoditised.
The Bottom Line – My Personal Rule of Thumb
Here’s how I think about it these days:
Under £250k investable assets – Almost never worth ongoing percentage fees. Use one-off project advice or DIY.
£250k–£750k – Ongoing advice can make sense, but push hard for fixed or capped fees.
Over £750k (or complex) – Percentage fees start to become justifiable – but still negotiate and demand proper service levels.
Your money has to work harder than ever in 2025. Make sure anyone you pay to look after it is genuinely earning their cut.
Because at the end of the day, the most expensive adviser isn’t the one with the highest fee percentage. It’s the one who costs you the most in missed opportunities and unnecessary tax.
Have you checked your own adviser fees lately? Drop your experience in the comments – I read every single one.
