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Reducing the $5,300 upfront cost of financial advice

Financial advisors tend to be valued by those who use them, while the financially unadvised don’t see the need to pay.

KPMG research carried out last year at the height of the original COVID-19 pandemic found most people saw financial advice as a discretionary spend, while those who took financial advice saw it as essential and 70% of customers (a higher proportion than for insurers or super funds) were pleased with the service.

Compliance is pushing up costs

With this backdrop, it is important that any unnecessary costs facing financial advisers are reduced as much as possible, to increase the likelihood of more people taking advice. But the cost of complying with rising regulatory and professional requirements has driven the cost of advice production up over the last few years.

The Financial Services Council asked KPMG to assess the impact of proposed FSC reforms on the advice process, including hours, time, and cost per step of the process. These reforms were initially part of an FSC green paper and now a White Paper published ahead of the stated intention of the Federal Government to conduct a review into Financial Advice.

There are seven steps to the advice process:

  • Identification of advice needs
  • Meeting of advisor and client
  • Preparing the financial plan
  • Second meeting where the advice is presented
  • Client signs the Statement of Advice
  • Implementation of recommendations
  • Review of the plan

Many advice firms cannot cover their costs

Our research found that it currently costs financial advisers more to produce advice than is charged as an up-front fee to consumers.

The FSC’s proposed reforms include abolishing lengthy, complex, Statements of Advice for a simpler, consumer-faced ‘Letter of Advice’. They also suggested adopting a new legislated financial advice model, clarifying and removing the currently complex labels for different types of ‘advice’. It is recommended advice would be billed as, simple; complex; or specialised. General information would be in a separate category.

It also included removing the best interest duty ‘safe harbour’ steps from the Corporations Act, while retaining the best interest duty obligations and enhancing the professional code of conduct. We do not believe this will reduce consumer protection but will save costs as the research indicates.

Statement of Advice costs $5,300

Our analysis found that these proposals had the potential to reduce the cost of advice by up to 39% and cut down the time spent on creation of a Statement of Advice by up to a third. The average cost of producing a statement of work, we found, could fall from over $5,300 to less than $3,700, a possible saving of 37%.

We also found the proposed reforms could free an adviser’s time to enable them to see more clients (up to 44 more a year) or use this time for other business critical activities such as training and business development.

We also looked at how technology could be used better, over time, to reduce costs. While there is no single advice solution which will unilaterally solve the advice challenge, we believe leveraging technology may further aid a provider to reduce the cost of advice, aiding affordability and also facilitate better, more efficient interactions between the client and adviser – aiding accessibility.

We are seeing providers seeking to harness a broad range of technology capabilities to drive enhanced customer experience, back-office efficiencies, and compliance. More could be done.

KPMG welcomes the opportunity to be part of the discussion on reforms which seeks to make advice more affordable and accessible to more Australians.

Click here to read the full report.


Cecilia Storniolo is Partner, Superannuation Advisory, Actuarial & Financial Risk at KPMG. This article is general information and does not consider the circumstances of any investor.


David C
October 24, 2021

Having used financial advisers and planners over the years, I am retired and living off the remnants of my SMSF left from 2 very bad experiences. The first was an incompetent accountant/adviser who made so many errors on tax returns, investment return statements and other documentation. Another adviser was just as bad, during the GFC was not contactable by phone, or by appointment. The only plus from the experiences is that I qualify now for a full pension, not a part one. I am a highly qualified accountant who specialised in management systems, so not up with statutory/tax type issues. 

October 24, 2021

Many, many moons ago, at the young age of 20 I went in to put some money into a managed fund. I told him which fund I wanted to invest in, and never saw or heard from him again. Years later I found out he had been charging a trailing commission on my small investment. After that I learnt how to invest and choose funds/ETFs/shares/hybrids and have avoided all contact with financial planners/scammers with their commissions, cookie cutter statements of advice and wrap funds, all designed for their own benefit, protection and convenience. Investing is easy. You do not need a fee charging financial nanny. DIY. My small investment at age 20 has turned into millions and it gives me pleasure to deprive financial planners of any part.

Andrew Ramsay
October 24, 2021

A lot of people - overwhelmingly men - think that with a little effort they can do it all themselves and financial advice is redundant. I say, go right ahead and good luck but I'm sure most of you will make some very expensive mistakes. The good news is that you may not even realise that so, hey, all's good. You might want to also consider using Dr. Google to solve your medical issues as that's cheaper than consulting specialists with their decade or more of training.

October 25, 2021

I can't remember the exact statistic, but it was something like 95% of financial planners give the rest a bad name.

October 24, 2021

I wanted tax advice on a specific aspect of my SMSF. I could only get a Statement of Advice from a financial planner. Therefore forced to get a report I did not need, I did not want, with lots of information that I already knew to get one answer I needed... I was amazed that I could not get a specialized (focussed) advice. To be forced into a full financial advice scenario, is presuming that every SMSF Trustee is a dill that cannot read the time on his watch... This not conducive to a beneficial relationship with your adviser as well as efficient and effective use of everyone time.

Jeff Oughton
October 27, 2021

Another "crook" advisor?....There is the option available to provide "single issue advice"..

October 23, 2021

Return minus advice fees equals a loss. It’s arithmetic and can’t be argued.

Jeff Oughton
October 24, 2021

There is no one service or event that fits the need for financial advice. There are also many sources (apart from licensed financial advisers.)

My (free) advice is that for many individuals, couples, families - advice needs are typically episodic (triggered at points in time by a range of events - known and unknown), a partial service (covering some of administration, asset management, accounting, tax, debt management, estate planning etc etc) or an ongoing complex full service.

If you need advice; above all it needs to be trusted - built on capabilities and experience source with good governance and some recourse (you would not get on a plane without a pilot etc etc) - and be dialled up and down depending on your needs and the complexity of the situation.

Fees paid need to be dynamic (unrelated to funds under advice/management) and unbundled for the underlying service (be it - strategic advice, admin, accounting, tax, investments etc), but also allow for some retainer (if it is ongoing at call).

For an ongoing full service, the advisor needs to know your current personal circumstances, future goals, guiding principles and existing strategy (investments/positioning/risk, tax & structuring, implementation/process). This involves time and related business expenses for keeping up to date with industry changes and client needs.

Simple - but fees should depend on the complexity and needs of the client.

October 23, 2021

Very interesting thread. Index funds and ETFs are low cost but not necessarily the best outcome unless you’re happy to have market returns. Capital weighted index funds are forced to buy stocks effectively when they’re at their most expensive and largest weight to the index. Which could be just the time to be trimming. Especially in a concentrated market like the ASX.

Many ways to skin a cat and get from A to B.

1. Advice can assist with a less rocky road
2. Avoid noise and herd mentality
3. Even when rates are low, build up some cash
4. Diversification is great if you want to sleep at night but have relatively mediocre returns in the long term
5. Shares in quality businesses will hold any investors in good stead over a lifetime
6. If you make decisions based on noise and short term, you’re a speculator not an investor
7. Avoid fads, financial engineering and crypto
8. Avoid purchasing depreciating assets like cars when they’re new

FP 20yrs
October 23, 2021

You sound like you’re focussed on investment advice only. It’s one of many hats a Financial Planner wears. Incidentally, do you know a Financial Planner/Adviser can be sued for not addressing the other hats?
Take specialist advice in cash flow management, cash flow protection, estate planning, tax effective investment, debt management, asset protection, wealth protection, entity management, whole of asset sheet management, family issues, business complexity and a few other more complex and infinitely more valuable issues and you’ll see where it goes up in complexity quickly.

October 23, 2021

Hi, I am financially literate and keep across developments. Having paid for a SOFA on a couple of occasions in the past (and found them somewhat useful), I am now looking for someone that might fulfill the role of a financial coach rather than adviser. That is, I am very comfortable to make my own, informed, decisions but it would be good to have someone to talk to and provide insights to “ improve” my game.

Kate r
October 23, 2021

Hi Michael, I’m in similar situation and run my own money. I did however recently engage a financial coach who was an ex financial adviser for a set fee. He could do everything except recommend product which suited me perfectly. I agree it’s nice to talk to someone to bounce ideas.

October 25, 2021

Hi Kate We are in retirement, pension phase, and are handling our own finances. At our stage of life, an adviser is overkill, but It would be nice to be able to talk to someone about some of the peripheral things that can make the "navigation" simpler. 

October 23, 2021

And when the coach gives you bad advice there is no PI insurance to claim on. from an adviser

October 23, 2021

Financial Planners don’t just worry about investments and should not be graded on that alone. I once found a client $100,000 in overpaid tax because he was not claiming the tax free threshold on his Defined Benefit pension over several years. Also reduced death benefits tax, co-contribution, deductible contributions, spouse contributions, Centrelink planning the list goes on.

October 20, 2021

I wonder how many people actually read the Statement of Advice that they pay $5k for.

October 21, 2021

I have often thought when looking at these Statements of Advice, which usually amounts to about 100 pages, just how much of those 100 pages are valuable to me (the client). So I went through one and found that of those 100 pages, only about 12 told me what I was interested in. What would happen if I were to receive the invoice from my planner for $5,000, and told him that I was going to only pay for what was valuable to me, and gave him a cheque for $600???? His response, well the other pages are necessary to "comply". My answer, why should I pay for something that I don't need or want?

October 23, 2021

John this is a question to pose to your local member, not your adviser. You’re searching for answers in the wrong place. It would actually be extremely beneficial if as a client you actually wrote to your local members, who is solely responsible for that, they need to hear from consumers.

Ian Nettle
October 21, 2021

from experience not many, same goes with PDS's and even FSG's. Its a trust business. I used to explain to clients that I have never seen a fund manager say they are lousy! Good advice should be all about strategy, rather than thinking that I can pick a better investment than the next person. Sadly the public primarily thinks it is about investments. I am now a retired old bloke who uses YMW to assist with my own research. To put all this compliance in perspective. I need to make a claim against my household contents cover. I am only just now reading the policy document to see if this claim will be possible!! All the best with your own journey Davo.

October 23, 2021

What is "YMW" ??

October 21, 2021

I once received a financial plan that (amongst other things) had four pages which showed that in certain times "growth managers" performed better than "value managers" and at other times the opposite was the case. They presented a nice graph to prove their point, and recommended a "blend" of managers, some growth and some value.

Dah! I could produce an almost identical graph that showed that at some times a manager who's name commenced with the letters between A and L produced better returns than managers that commenced with the letters M to Z and at other times the opposite.

Four pages wasted, which took time to produce and time for me to read, but didn't add value.

The average return of the "value" and "growth" managers? Same as the index, but with higher costs.

All for "compliance" reasons. Adding cost, but not value

October 22, 2021

"which took time to produce "

Did it though? They'll have a template with 88 of the 100 pages already in place. Ctrl-C Ctrl-V takes about 3 seconds.

October 20, 2021

You got to be very careful getting financial advice. A financial planner got me to invest in pulpwood and got me to take transfer my super from defined benefit and they took their fees from it. As everyone is now aware, the pulpwood investment was a dud investment and money making scheme for the Financial Planner and their companies. Beware!

October 21, 2021

This highlights the real reason for the complexity and cost of a financial plan. Trying to stop financial planners from using these money making schemes.

But the fund manager/investment placing is the smallest and least important part of a financial plan. The thing that adds the most value is the strategy (see comment from Dean Tipping as an example of good strategy) and the second most valuable benefit that a financial planner can give is asset allocation (getting the highest return for the lowest amount of risk)

The actual selecting of a fund manager, or even an individual share doesn't add much value to the client, but is the single most time consuming and regulatorary part of the plan. After all, and index investment will be better than 50% of the participants in the market (before fees) definition

If a "financial strategiest" was to concentrate on the high value add (to the client) part of the work - strategy and asset allocation, then work load and compliance requirements would be greatly reduced and the money making people would be removed from the industry

October 20, 2021

Financial Planners spend on average 80% of their time serving the regulators, only 20% on their clients. And Planners have to pay fees to the Regulators - so they can regulate more? We badly need a new system.

Dean Tipping
October 20, 2021

Granted, financial advisers are not for everyone and that's fine but as other commentators have alluded to here, there's much more to it than just investing money.

For example, I presented a plan to a couple yesterday and one of the strategies recommended was to utilize unused concessional contributions from prior years to effectively reduce the tax rate on capital gains they will realize from disposing of poor performing rental properties to 15% as opposed to a marginal rate of 37%. And the only reason why there are capital gains on the properties is due to the capital works deductions lowering the actual cost base...not through significant appreciation in property values.

They had no idea this strategy was available...but it will help them to minimize income tax whilst restructuring their asset mix to ditch under performing investments in preference to growing their wealth inside better performing industry super funds that all things being equal will set them up for a very comfortable retirement...and possibly open up an age pension entitlement due to one person being 7 years older than the other by directing as much as possible into the younger's accumulation account.

The other issue that's not too far away from really lighting up is; as most people with size-able amounts in pension mode inside super are in the hit-zone to meet their maker, there is an impending death benefits tax at the rate of 17% on the taxable component of their super that will find its way into consolidated revenue within the ATO as opposed to the beneficiaries of their will. A financial adviser can help to reduce the impending DBT.

I'm an accountant by trade but now work as a financial's a complex borrow a legal reference; "he who represents themself has a fool for a client..."

October 20, 2021

Great Example. The catchup concessional contribution rule has had some great benefits for my clients that did not know it existed.

October 20, 2021

Do yourself a favour and invest in Index funds, both within Super and outside of it and stay clear of the financial advice industry.

October 20, 2021

Here here Mark. Take care of yourselves.

Ian Nettle
October 21, 2021

And there lies the problem Mark. Majority of the public think that good advice equals picking the best investment. Advice should be a separate thing. Like I said in a previous post I never came across a fund manager who said they were lousy!! Cheers.

Jon Kalkman
October 22, 2021

Do yourself a favour and get yourself an education on structures and strategies. Learn how superannuation and Centrelink works. Understand the pit-falls of estate planning. Understand a bit more about tax and learn the benefits and costs of investing in different asset classes. Even if it doesn’t make you a competent self-directed investor, it might enable you to ask the right questions. Most of all, it will help you figure out if you are buying something or being sold something. Buyer beware.

October 23, 2021

Mark I have acquired many clients who as a result of their OWN usage of index funds, have got their fingers significantly burned. Funds are an implementation tool of advice and nothing more. Most people will performance chase index funds, buy and sell at precisely the wrong moment and put together bad asset allocations of those index funds. I have seen this over and over again, with the performance chasing the most severe issue. The most stark example I have ever seen was in March 2020 and the months after, where diabolical decisions were made by many people with their cheap products, many people sold right at the bottom and missed the rally, not one client of mine liquidated a dime. Don’t confuse advice with investments, rather find an adviser with a passive investing philosophy.

October 23, 2021

What’s interesting though is that most ‘investors’ would still underperform the index when investing in low cost passive funds anyway by poor trading decisions. I think the great Peter Cooper had some great figures showing this within his fund where investors were underperforming the funds returns through trading overtime. Controlling inexperienced investors behaviours during different market cycles is also a way to add value as an adviser. Not all advisers are crooks Mark and selecting funds to invest in is the easy part.

October 20, 2021

Does anyone know a great fee for service adviser?
I don't need a financial plan, I just need someone who can advise me where to put my money to get a fair return eg. which ETF's, which money managers/funds etc.
I have a SMSF and I am retired. I don't feel I know enough about share investing and I would like to have more free time ..... I spend a lot of time reading, researching and worrying.
I have not been able to find a fee for service adviser who did not insist on a plan and ongoing fees. I know all the rules around Super (sometimes more than the advisers I've seen) .... just need some guidance re investments.

October 20, 2021

Hi Sally,

When providing personal advice to clients we are legally required to provide a statement of advice, trust me it would be a lot easier and less expensive (for all) if we didn't have to do this - Our industry is heavily regulated

There are many fee for service financial planners available and ways you can structure your investments in a low cost manner that is passively invested - allowing you more free time, which would reduce your ongoing costs (fees). You cannot get around completing a statement of advice when personal advice is required.



Ian D
October 20, 2021

As I read it, a SOFA is only required for "retail" clients. Someone stops being retail when they have assets of 2.5M

October 20, 2021

Hi Sally.
Like Luke said, unfortunately we have to provide a whole plan (Statement of Advice) when someone needs help. Financial Planners would desperately love to help people in your situation with some simple guidance to make sure that you are on the right track and put your mind at ease. It is very common that this is exactly what many people want.
If we were allowed to do that, the cost of advice would plummet and it would be a win for every one, planners included. But until the government drastically changes the laws that we are forced to work under, there is zero chance fees will reduce, or the planning process will get any simpler.
It's a sad situation we often find ourselves in, when we tell people that it is not worth it to them to get our advice because the cost is too high, when we know that we could actually help them quite quickly and affordably if only we were allowed to.
Good luck with working out your situation. It may be worth getting advice as a once only thing to set you up to look after yourself for the future.

SMSF Trustee
October 20, 2021

But Sally, the "SM" in "SMSF" is supposed to mean you make those decisions yourself! Seems to me like you'd be better off closing your fund and putting it with a reputable super fund provider that makes those decisions. You don't need an adviser - you need a fund manager. You're not able to run a "self-managed" fund.

Ramon Vasquez
October 20, 2021

Hi Sally .
Go to the Market Index site and look at the table of ETFs available .

Then choose an Etf from each of the eleven sectors most appropriate to your cost perspective , as well as the liquidity factor [ most easy to buy in , or sellout of ] .

On a simpler level of operation you might want to just choose one ETF each from a separate country ;
suppose the USA , Britain , Australian and one from those which represent the world at large .
You may then wish to equal - weight the four holdings , which is to say , allocate an equal amount of capital
to each one of the four .

Best wishes , Ramon .

Mike West
October 24, 2021

I think you are breaking the law Ramon , giving advice, .... You need a 4 year degree , pass stringent tests etc , now do a qualifying year , and pay about $5000 p.a to ASIC and about $35,000 for Pi dealer fees etc .Oh and you have to give a 100 page PDS from the ETF product provider to the client that he can't understand nor reads , a 100 page SOA from you the adviser to the person that asks a question that they won't understand nor read .Investment goes down and they then take you to the complaints tribunal where if you are innocent you pay the $30,000 excess on your policy .... or just hope ASIC is asleep and they wake up 5 years later and have a RC .

October 20, 2021

We don't use financial advisors. Our accountant does a great job making sure we have our pension set up properly (no, she doesn't offer formal financial advice). The main area I might get outside help would be around centrelink, but that's a dilemma as those who use centrelink have less assets and would probably baulk at the cost, whereas those with more assets might find they can manage their investments quite well and don't need to naviagte centrelink. Many readers here also subscribe to Morningstar and simple tools like the model ETF portfolios for aggressive/balanced/conservative investors will get equal or better outcomes. I think one of the main problems advisors have is the need to avoid being sued so they tend to follow a cookie-cutter approach of assess risk tolerance followed by recommending a portfolio which meets the accepted balance of growth and defensive assets. Something most people could find on the internet. So where's the value-add? And of course the reputation of the industry is not flash which I'm sure is not a trivial issue.

October 21, 2021

Steve, your accountant is not acting in your best interests. And they are acting illegally by providing financial advice when they are not licenced to. I'd be wary.

If you are in the position to benefit from Centrelink advice, then by definition you'd don't have enough in super to warrant a self.managed fund. You are paying fees and taking on trustee that you could avoid for a better outcome.

October 21, 2021

And herein is the problem. Accountants are more qualified than the sales/product orientated financial planners. Accountants (the ones that do more than just maintain book keeping services) generally are strategic thinkers and that is where the most value add comes from advice.

Forget about deciding which investment manager will produce the highest return and get strategic planning - consider tax planning, risk management, asset allocation, and then go for a diversified group of fund managers, or an index manager. Choosing the fund manager is the easy part, getting the strategy right is where the value is added, and accountants will do that better than most financial planners. Don't ask an accountant for investment advice though, that is not their strong suit, but that is where there is the least value add.

People seem to think that "superannuation" is an investment, is isn't, its a tax structure. Anything you can invest in through super, you can invest in outside super. Choosing a tax structure is right up the accountant's alley. Choosing the investment doesn't add much value (as long as you avoid fad investments like pine forests, and tea tree oil, etc which are about as good as investment as putting your hard earned money on no5 in the third at flemington)

October 23, 2021

Billy, I service the affluent sector and my clients have some of the most highly paid accountants from every premium firm in town. The strategic thinking of the accountants is diabolical and 9/10 times, we land up supplanting them as the central relationship. The reason is precisely the look backward nature of accounting, the lack of forward planning and the deal with events gone by in the previous tax year mentality. I am also horrified at the sheer volume of poor advice and number of structures that have been set up for the benefit of the accountant and not the client. We have wound up dozens and dozens of SMSFs , companies , trusts etc for this very reason and this year in particularly we have extinguished tens of thousands of unnecessary accounting fees. If a regulator saw what I saw, they’d be creating FASEA and safe harbour for the accounting industry, I see no evidence they are responsible self-regulators and am taking a more active role then ever in my clients affairs to protect them from shoddy advice from accountants. It is constantly communicated to me by a client that they regret thinking an accountant was their adviser for so many years.

October 26, 2023

That's incorrect. Accountants are not more qualified than Financial Planners. For instance, I'm a Financial Planner and hold three finance related master's degrees. Many of my fellow advisers have similar post graduate degrees.

Furthermore, just today I had to step in (thank goodness) and prevent a client exceeding the concessional cap by claiming a $10,000 personal deduction from their super fund on their accountant's advice. Why? Because the accountant didn't know what a Notionally Taxed Contribution was, nor what type of contributions counted towards the concessional cap!

It's obvious the keyboard warriors on here slagging off Financial Planners have no idea the skills and knowledge required to be a licensed adviser in 2023 Australia.

The Dunning–Kruger effect is alive and well.

October 20, 2021

Absolutely correct. Sound investment planning is not complicated. You can cover the essentials in about 10 minutes and any time spent after that rapidly encounters the rule of diminishing returns.

October 20, 2021

The real issue is, do you actually get value for money?

A lot or financial advice seems to be to over complicate a process to justify what they do?

There are not many magic bullets left in managing people's funds

Jonathan Kermode
October 20, 2021

David Financial Planning Advice goes much further than portfolio management and Construction, it includes Super Contribution strategy, identifying potential shortfalls in peoples future Retirement goals and putting things in place to help remedy this. It includes many many things and this is what consumers pay for.

Ian Nettle
October 21, 2021

You missed the biggy Jonothan "estate planning". Man oh man some people are creating very complex lives, eg. more than one marriage, children with different parents etc etc.

October 20, 2021

Hi David,

First of all I would say not everyone needs financial advice, so value for money is subjective and dependant on the advice an individual requires. There are many people that don't know what financial advisers offer from an advice perspective and if managing people's funds is all that someone is after and they believe that they can do it themselves, then that is an option.

I don't disagree with you that advice can seem overcomplicated, but that's not due to financial advisers, it is due to the regulators and the legal requirements that we are bound by. Let me put it another way, if you required comprehensive advice and we didn't spend the time researching your current position - assets, liabilities, expenses, current fees paid, existing life insurance policies etc etc etc researching appropriate advice needs and strategies and clients goals and needs then clients would be the first to complain that we didn't provide them with appropriate advice.

Financial Planners can provide advice in areas such as-
Estate Planning
Retirement Planning & Retirement Income Needs
Life Insurance
Cash Flow, Budgeting & Savings
Social Security
Aged Care
Tax Planning (financial advice)
Self Managed Superfunds

Hope this helps




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