Advisors may be paid through an upfront fee, an ongoing fixed fee, a percentage of assets, commission linked to a product, an hourly or project fee, or a combination. Each model creates different cash-flow effects and incentives. None of them is automatically fair or unfair.
The first question is what you will pay in rand and percentage terms, who receives it, when it is charged and whether it repeats.
The second is what it buys. An ongoing fee should connect to an ongoing service that you can describe and evaluate. A once-off planning fee may not include implementation or future reviews. Commission may be paid through the product rather than invoiced separately, but it is still part of the economics and should be disclosed.
Then ask how the amount changes. A percentage fee can rise when assets rise even if the service is unchanged. A fixed fee can also increase over time. VAT may apply to some quoted fees.
Try this now
For one advisor relationship, complete four fields: calculation method, expected annual rand amount, services included and cancellation terms. Mark estimates clearly.
Ask your advisor
- What is the total expected cost of your service over the next year?
- Which work is included, and what would cost extra?
- How does your remuneration change if I accept a different product or do nothing?
Compare fee models together with scope, complexity and service, not as isolated price tags.