Most investors know they’re paying something for advice. Fewer can say exactly how much. Even fewer have modelled the long-term impact of those fees—and what they might be costing in opportunity, compounding, or flexibility.

It’s not about whether independent financial advice is worth paying for. In most cases, it absolutely is. But in the UK, too many clients are paying ongoing fees that are entirely disconnected from the value they’re receiving. A 1% annual fee on a £1 million portfolio equates to £10,000 a year. That could be a reasonable price—or an expensive mistake. It all depends on what you're getting in return.

What complicates things is that adviser costs are rarely evaluated with the same scrutiny as investment performance. Most business owners wouldn’t tolerate vague invoices or misaligned incentive structures from a contractor, lawyer, or consultant. Yet many accept exactly that from their adviser—often for decades.

The real question isn’t “are adviser fees too high?” It’s am I getting measurable, compounding value that justifies every pound I’m paying?

The Cost Isn’t the Problem—Misaligned Value Is

Most investors focus too much on the number and not enough on the result. A 1% annual fee might sound steep. A flat fee of £3,000 per year might seem excessive. But without context, those figures mean nothing. The real question isn’t how much does my adviser cost? — it’s what am I actually getting for it?

A well-structured fee is not inherently a problem. If your adviser is protecting you from costly mistakes, guiding you through market volatility, securing efficient tax outcomes, or tailoring your retirement planning to the specifics of your future income needs, their fee could easily pay for itself several times over.

The real danger lies in misalignment. That’s when you’re paying high fees for low-value input. Or worse, paying recurring charges for advice you no longer need—or never really needed in the first place.

Here’s where it gets complicated: bad value doesn’t always look like bad service. You might be receiving regular reviews, glossy reports, and polite conversation. But unless those meetings lead to actionable decisions that measurably improve your position—more tax saved, better drawdown strategies, sharper investment allocations—then the adviser is simply being pleasant, not useful.

This is especially important in the UK context, where many advisers still default to outdated percentage-based fee models tied to assets under management. For passive investors with diversified portfolios and minimal trading, that model can quickly become unjustifiable. You shouldn’t be paying a percentage-based fee for a portfolio that hasn’t changed in three years.

How Adviser Fees Compound Against Your Wealth

One of the most misunderstood aspects of adviser fees is that they don’t just reduce your returns once. They reduce what you’re able to reinvest, year after year. And over time, that has a snowball effect that can seriously undermine your long-term financial trajectory.

A Small Fee, Repeated for Decades

Let’s say you’re paying a 1% annual fee on a £750,000 portfolio. That’s £7,500 per year. Not pocket change—but not outrageous either.

Now project that forward 20 years. If your portfolio averages 6% annual growth, but you lose 1% of that to fees, your effective return drops to 5%. On paper, that might seem fine. But here’s the difference it makes:

• At 6% with no fee: £750,000 grows to £2.4 million
• At 5% with fees: it grows to £1.98 million

That’s nearly £420,000 lost, not to poor performance—but to silent, steady compounding of adviser fees. And this doesn’t even include platform charges, fund fees, or transaction costs.

Fee Drag Is Hard to Spot—Until It’s Too Late

Most investors don’t feel this cost in real time. That’s what makes it dangerous. It’s not like a bad stock pick that crashes overnight. Fee drag accumulates quietly. And unless you’re tracking the impact annually and comparing adviser value to alternatives, it’s easy to miss.

Business owners are particularly vulnerable. Why? Because their adviser often ends up managing cash from a business sale or pension transfer—high-value, low-activity portfolios where percentage-based fees can quietly erode wealth without providing ongoing strategic input.

Are You Overpaying for Simplicity?

If your adviser has placed you in a low-cost, buy-and-hold investment strategy (say, global index funds or multi-asset portfolios), and nothing significant has changed in your portfolio for several years, ask yourself this:

• Why am I still paying a percentage-based fee?
• When was the last time this advice saved me tax, improved my drawdown strategy, or spotted a blind spot in my planning?

The most common answer is inertia. But the more expensive answer is lost compound growth.

What Real Value Looks Like in Independent Financial Advice

It’s easy to critique fees—but harder to quantify value. So let’s flip the conversation: when is an adviser worth what they charge? What does genuine, high-impact financial advice actually look like?
It’s not about market predictions or fancy charts. It’s about real decisions, with real consequences, made better by having the right person at the table.

Tax Planning with Strategy

A good adviser won’t just recommend an ISA or pension contribution—they’ll help you optimise the timing, structure, and limits of your contributions based on your broader financial picture.

• Are you using all your available tax allowances—including those your spouse or civil partner may be entitled to?
• Are you taking advantage of Business Asset Disposal Relief before a company sale?
• Is your drawdown strategy designed to minimise income tax and preserve your lifetime allowance?

Even a single well-timed recommendation here can save thousands. And this is where many independent financial advisers shine—they’re not tied to a limited range of products and can build tax-aware strategies tailored to your full financial life.

Behavioural Risk Management

During market downturns, the real value of advice isn’t portfolio selection—it’s stopping you from making emotional decisions. Selling at the bottom, chasing performance, or switching to cash at the wrong moment are all common, costly mistakes.

A strong adviser keeps you grounded, not by being reactive, but by building conviction in your plan before things get rough. That confidence is what prevents panic and ensures you stay on course.

Business Owner & Exit Planning

For those with complex wealth—especially business owners approaching sale or succession—good advice can unlock six- or seven-figure improvements in outcomes.

• Structuring investments post-sale to maintain income without triggering unnecessary tax
• Planning how to phase out of the business while securing family or shareholder equity
• Protecting assets in the event of divorce or incapacity

These aren’t generic planning needs. They’re situational, strategic, and deeply personal. And they often go untouched in low-cost, volume-based advice models.

A Note on Proactivity

One of the simplest signs of adviser value? Proactivity. Are they coming to you with insights, opportunities, and risks before you ask? Or are you chasing them for basic updates?

A proactive adviser earns their keep by staying ahead of change—market, regulatory, or personal. If your adviser only reacts when you reach out, you’re not paying for strategy. You’re paying for admin.

Fee Structures – Are You in the Right Model for Your Needs?

Not all fee models are created equal. The problem isn’t the structure—it’s using the wrong structure for your situation. A fee that’s perfectly fair for one investor could be wildly inappropriate for another, simply because the underlying needs are different.

Let’s break it down.

Percentage of Assets Under Management (AUM)

How it works: You pay a fixed percentage of your portfolio value each year—typically between 0.5% and 1%. If your portfolio grows, the adviser’s fee increases accordingly.

When it works:

• For hands-on portfolio management, where there’s regular rebalancing, strategic allocation, and ongoing tax optimisation.
• When you need a long-term planning relationship with broad scope—investments, pensions, estate planning, etc.

When it doesn’t:

• When your portfolio is static, low-cost, or mostly passive.
• If you’ve recently exited a business and are holding a large cash balance with minimal activity—1% of £3 million in cash is a steep price for inactivity.
• If your adviser is no longer offering regular planning or meaningful portfolio adjustments.

Fixed Fees

How it works: You pay a set fee monthly or annually, regardless of portfolio size. This could range from a few hundred to several thousand pounds per year, depending on complexity.

When it works:

• If your portfolio is substantial but doesn’t require constant attention.
• If you want to avoid the percentage penalty for being successful—especially post-sale or after a liquidity event.
• If you value predictability and are comfortable benchmarking the adviser’s ongoing value against that fixed cost.

When it doesn’t:

• If the adviser has capped the fee but quietly reduced their service to match.
• If the fixed cost is high relative to the amount of input you actually require.

Hourly or Project-Based Fees

How it works: You pay by the hour or for a defined scope of work—such as building a financial plan, advising on pension drawdown, or helping with a one-off inheritance issue.

When it works:

• For those who need specific advice but not ongoing portfolio management.
• For business owners or families with high complexity but clear boundaries on what they want help with.

When it doesn’t:

• If your situation is fluid or likely to change, requiring repeat engagement.
• If your adviser becomes reactive, waiting for you to initiate every interaction (which means you might miss what you don’t know to ask about).

Adviser Fees and Financial Planning

When you’re managing significant assets or preparing for long-term financial milestones, the way you pay for advice matters. Poorly structured fees can quietly reduce returns and limit the effectiveness of even sound planning.

Strong financial outcomes rely on clear thinking and careful execution. That includes understanding what you’re paying for, why it’s charged that way, and whether the value holds up over time.

A transparent, well-aligned fee model supports better decisions. It makes it easier to measure results, hold your adviser accountable, and ensure the advice you’re receiving genuinely supports your goals—not just the adviser's revenue.