The average ongoing advice fee has increased by 9 basis points (bps) since 2023, NextWealth’s new Fee Benchmarking report has found.

It revealed that a growing proportion of advisers were charging between 91 and 100bps for ongoing advice.

Asset-based fee structures were the most popular, being used by 70 per cent of financial advisers, while fixed fee structures were the second most common, used by 29 per cent.

NextWealth’s analysis found that financial advisers’ clients generally understand the fees they pay and value the services they receive, with 85 per cent understanding the fees they pay and 76 per cent believing they receive good value for money.

It also highlighted that trust, financial planning quality, and investment performance were the top factors valued by clients, while regulator communication and good use of technology to help finance management were also seen as important.

NextWealth managing director, Heather Hopkins, noted that the financial advice market was under growing scrutiny amid regulatory change, consumer expectations, and competitive pressures reshaping how firms set and justify their fees.

“Financial advisers need to strike a delicate balance, ensuring profitability while demonstrating value to clients,” Hopkins continued.

“This report helps advisers strike that balance by providing independent fee benchmarks and defining the aspects of advice most valued by clients.

“While the regulator is focussed on value, the cost of delivering advice is mounting. This has forced many firms to increase their fees. Despite this, more than three quarters of advised clients say they receive good value for money.

“The report shows transparency and openness are key to evidencing value. Clients told us they expect more personalised advice and improved communication when fees rise. It also demonstrates that well informed clients are happy clients. The more familiar clients are with financial concepts, the higher the perceived value of advice.”

The research found that clients paying fixed fees were more likely to feel they represented good value and were 19 per cent more likely than those paying asset-based fees to say they receive ‘excellent’ value for money.

Investors under the age of 55 tended to prefer fixed fees, while those aged 55 and older preferred asset-backed charges.

It also found there was a “marked increase” in the variety of fee structures used by financial advisers, specifically subscription, capped, and hourly rates.

This trend towards a greater variety of fee models was primarily driven by larger advice firms, according to NextWealth.

“What we’re seeing is a much greater appetite for flexibility, with more advisers offering alternative fee structures,” stated Hopkins.

“Offering flexibility allows firms to cater to the needs of a wide range of clients and is more common in larger firms. One finding that really stood out to me was the clear generational difference on fees.

“Younger investors under the age of 55 show a clear preference for fixed fees, while older clients, over the age of 55 prefer asset-based charging models. This suggests that firms looking to attract the next generation of investors will need to offer a variety of models. This is important not just for financial advice firms but also platforms who often facilitate these fees.”

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