Paying for financial advice

Advisers must tell you how they are paid.

An adviser that provides financial advice has an obligation to take reasonable steps to disclose certain information, including all fees and costs associated with that advice.

Generally, advisers are paid for advice in two ways:

Directly – via a fee for the service the adviser has provided, or:

Indirectly – the adviser is paid a commission from the providers whose product you sign up to.  You pay nothing upfront for this, but you should know this and recognise that you may be offered a limited choice of options from only one provider.

You might also pay an ongoing fee – Some advisers are paid a “trail commission” where money is paid to them by a supplier of a product, for the duration of the relationship.

Research shows that most consumers prefer to have costs clearly written down so don’t be afraid to ask the adviser to do this.

Finally, if you are unclear on anything, ask. Advisers should present any fees and costs associated with the advice in a clear, concise and effective manner.