Is a 0.5% financial adviser fee good?
A 0.5% fee is £500 a year on £100,000, £1,250 on £250,000, £2,500 on £500,000 and £5,000 on £1 million. It sits at the lower end of MoneyHelper's broad ongoing-advice illustration, but value depends on the service, minimums and other costs.
Understand financial advice costs →
0.5% in annual, monthly-equivalent and ten-year pounds
| Amount charged | One year | Monthly equivalent | Simple ten years |
|---|---|---|---|
| £100,000 | £500 | £41.67 | £5,000 |
| £250,000 | £1,250 | £104.17 | £12,500 |
| £500,000 | £2,500 | £208.33 | £25,000 |
| £1 million | £5,000 | £416.67 | £50,000 |
The monthly column divides the annual fee by 12; it does not say the fee is billed monthly. The ten-year illustration assumes the same asset value and 0.5% rate every year, with no growth, withdrawals, investment effect or other charges.
What does 0.5% cost?
Multiply the charged amount by 0.005. On an unchanged £100,000 that is £500 for one year; on £250,000 it is £1,250; on £500,000 it is £2,500; and on £1 million it is £5,000.
The comparison table gives monthly equivalents and simple ten-year totals to make the scale easier to see. It does not say the fee is collected monthly. It also assumes the same balance and rate every year, with no growth, withdrawals, investment effect or other charges.
Worked example: a 0.5% adviser fee on £1 million
If the fee applies to the whole £1 million for a full year, 0.5% is £5,000. Dividing that by 12 gives a monthly equivalent of £416.67, although the firm may collect the charge on a different schedule. Multiplying £5,000 by ten gives a simple ten-year illustration of £50,000.
That £50,000 is not a forecast. It holds the asset value and rate constant, ignores growth and withdrawals, and does not model the investment return that could have been earned on money used to pay charges. It also excludes any initial advice, platform, fund, discretionary-management or transaction costs.
For a deliberately broad first-year illustration, MoneyHelper currently uses 1% to 3% of the amount involved for initial pension or investment advice. If that full initial range and a full year at 0.5% all applied to the same £1 million, the first-year adviser total would be £15,000 to £35,000: £10,000 to £30,000 initially plus £5,000 ongoing. If the initial fee happened once and the £5,000 ongoing charge then stayed unchanged for ten years, the simple adviser-fee total would be £60,000 to £80,000. This is arithmetic using MoneyHelper's broad illustrations, not a quote; real fees may use caps, tiers, a different charging base or a part-year ongoing charge.
How does 0.5% compare?
MoneyHelper gives 0.5% to 1% as a broad illustration for ongoing pension or investment advice. That puts 0.5% at the lower end of its range, but the range is not an FCA tariff, a market quote or proof that the fee represents good value.
Advisers can use fixed fees, hourly rates, percentages or combinations. Compare the complete proposal rather than treating a lower percentage as a like-for-like bargain. A firm offering focused investment oversight and one offering wider financial planning may both quote 0.5% for materially different responsibilities.
Check which money is actually charged
The rate might apply to assets managed by the firm, every pension and investment under advice or separate bands of a portfolio. Cash, assets held elsewhere and a partner's accounts may be treated differently. Ask the adviser to name the charging base and show the calculation in pounds.
If the charged balance rises, the cash fee normally rises unless tiers or a cap change it. At 0.5%, a move from £500,000 to £600,000 changes the annual fee from £2,500 to £3,000. If the balance falls after withdrawals, a cash minimum can prevent the fee falling in the same way.
A minimum fee can make 0.5% cost more
Suppose a firm uses 0.5% with an invented £1,500 annual minimum. On £100,000, the percentage calculation is £500 but the minimum makes the charge £1,500, an effective rate of 1.5%. On £250,000, it makes the charge £1,500 rather than £1,250, an effective rate of 0.6%. At £300,000, 0.5% reaches £1,500 and the minimum stops changing the result.
This is not a typical-price claim. It demonstrates why the written minimum, tiers and cap matter more than the headline alone. Ask for the exact calculation at your current balance and a plausible balance after growth or withdrawals.
Add platform and investment charges
The adviser fee may be only one part of the annual cost. Platform, fund, discretionary management, product and transaction charges can be additional. Ask for the layers separately, then a combined total in pounds using the same period and charging base.
For illustration only, 0.5% advice plus a 0.25% platform charge and 0.20% of fund costs equals 0.95% where every percentage applies to the same balance for a full year. That would be £2,375 on £250,000, £4,750 on £500,000 or £9,500 on £1 million. Real quotes can use different rates, bases and included services, so do not add a cost twice if it is already bundled.
An initial planning or implementation charge can make the first-year total higher. Compare that separately from the recurring adviser and investment costs in a normal later year.
What should the ongoing service include?
Under the relevant FCA adviser-charging rules, an ongoing adviser charge must relate to a disclosed ongoing service, subject to specific provisions for regular-payment products. The firm should explain the service and charge, and provide a reasonable right to cancel without penalty.
Ask what planning, suitability reviews, investment oversight, meetings and access between reviews are included. The FCA's 2025 review found firms' ongoing services varied, though suitability reviews were generally part of the services in its sample. The FCA also told firms to ensure consumers receive the service they pay for.
When can 0.5% be good value?
It can be reasonable when the service solves recurring problems you value, the total cash cost is clear and comparable alternatives do not fit as well. It can be poor value when the ongoing work is limited, you do not use it or a minimum and additional charges make the total materially higher than the headline suggests.
Test the fee against one-off or periodic advice and at least one different charging structure. Keep the service schedule and review it after a full year. The useful verdict is not that 0.5% is universally good or bad, but whether this cash amount buys the responsibility and work you need.
Start with pounds
At £200,000, 0.5% is £1,000 a year; at £500,000 it is £2,500. These examples show why a percentage should always be translated to your balance. Check tiers, minimums, caps and whether the charge applies to the whole portfolio.
Ask whether the rate includes planning or only investment management. Two services at 0.5% can involve very different work and accountability.
- CompareInitial fee, annual fee, platform cost, fund cost and any transaction or product charges.
- ClarifyWhether the adviser is paid on assets they do not actively manage or review.
Test the recurring value
An ongoing fee should buy a defined service: meetings, cash-flow or retirement reviews, investment oversight, contact between reviews and action when your circumstances change. Ask for the service calendar and the responsibilities of both sides.
If your plan is simple and stable, a one-off or periodic review may be more proportionate. If your decisions are changing, the same rate may buy useful continuity.
- Good questionWhat will you do in a year when I have no major change, and what happens if I do?
- Good evidenceA written service schedule, not a promise that the fee buys ‘peace of mind’.
Do not optimise one number
A lower adviser fee can be offset by higher investment or platform charges. Compare the expected total cost and the quality of the decision being supported.
Test a lower rate for missing work
A 0.5% quote can look attractive next to a higher percentage, but start by identifying what it omits. Ask whether the adviser provides full financial planning, investment management, a limited review or a referral-only service.
Calculate the pounds at your current balance and at a lower balance after withdrawals. Ask whether a minimum or asset definition changes the effective rate. Then add platform, fund and product charges so you are comparing total costs.
Use a quiet-year scenario. If nothing changes, what meetings, monitoring and reporting will still happen? Use a change-year scenario. If you retire earlier, need a large withdrawal or receive an inheritance, what additional work is included?
A lower fee may be entirely sensible for a simple service. It may be poor value if you believe you are paying for active retirement planning but receive only a generic portfolio report. The written service schedule is the evidence.
Review the arrangement when the problem changes. The rate that suited accumulation may not suit drawdown, and a lower percentage does not protect you from a mismatch in service.
- Included workWhich planning decisions, reviews and conversations are included at 0.5%?
- Excluded workWhat would trigger a separate fee or referral?
- Total costWhat do adviser, platform and investment layers add up to in pounds?
- CapacityHow much access and response time is part of the service?
- ReassessmentWhen will you check whether the scope still matches your life?
What does the 0.5% fee cover?
Translate 0.5% into pounds at your balance and check whether a minimum or tier changes the result. Add platform, fund and product charges before deciding that the quote is low-cost.
Write the work you expect: planning, investment management, retirement modelling, meetings, access and action after a change. Ask the adviser to mark what is included, excluded or charged separately.
Test a stable year and a difficult year. A lower rate may fit a simple service, but it should not be mistaken for full planning if the firm does not take that responsibility.
Keep the service schedule and review it when your life changes. The fee can remain mathematically attractive while the service becomes the wrong shape for your needs.
- CashWhat does 0.5% cost after all fee rules?
- What the service includesWhich planning tasks are included?
- LayersWhat other costs sit underneath?
- ChangeWhat happens during a major life event?
- ReviewWhen will you reassess fit?
Check what a lower rate leaves out
At 0.5%, the cash fee rises with the charged asset base unless a cap or tier changes it. Calculate the amount at your current balance, then ask whether cash, pensions, investments held elsewhere or only managed assets are included. Check for a minimum fee, because that can make the effective percentage higher at smaller balances.
Request a written service schedule. It should distinguish financial planning, regulated recommendations, implementation, investment oversight, meetings and help between reviews. A lower percentage may be efficient for a focused service, but it should not be compared with a broader quote as if the responsibilities were identical.
Add platform, fund, product and transaction costs. Ask whether the adviser receives any other payment and whether VAT applies to any element of the work. Use one cash total for the first year and another for a normal later year so implementation costs do not disappear inside the comparison.
Finally, test the service against change. Ask what happens if you retire, withdraw a large amount, transfer another pension or need family-wealth planning. The rate is only good when the included work still fits the decisions you are likely to face.
Compare the same proposal at today’s balance and at a plausible higher or lower balance. A percentage charge moves with the assets even when the work does not move in the same way, while a minimum or tier can interrupt that relationship. Ask the firm to show those changes in pounds and explain whether the service, meeting frequency or adviser responsibility changes with them. This makes the future charging shape visible before a low headline rate becomes the main reason for choosing the service.
Test a low rate against the service you will actually use
Prepare a short list of the decisions you expect over the next year and ask which are covered by the 0.5% service. A basic investment review may be enough for one person and insufficient for someone coordinating retirement, business proceeds and family support. The percentage is meaningful only alongside that brief.
Check the minimum and the charging base. On an unchanged £150,000, 0.5% is £750 a year. If the agreement instead imposes a £1,500 annual minimum, the payable adviser amount is equivalent to 1% at that balance. This is a fictional example of how a minimum changes the comparison, not a quoted firm offer.
Ask what would happen if you needed an unexpected withdrawal or a new piece of planning. An inexpensive recurring service plus occasional extra work can be sensible, provided the additional charges and responsibilities are clear. Compare that total with a more inclusive service before judging the headline rate.
Retain the initial quote and review the first annual cost statement. That gives you evidence of what was actually charged and delivered, rather than a lasting impression based only on the advertised percentage.
Your decision checklist
- Calculate 0.5% in pounds at your balance
- Check what assets and work it covers
- Add platform and investment costs
- Compare one-off or periodic alternatives
When you may need personal advice
These are example calculations, not typical market prices or recommendations. Actual charges and suitability depend on the firm and your needs.
Sources and further reading
MoneyHelper - Financial adviser fees ↗
FCA - Adviser charging rules ↗
FCA Handbook - COBS 6.1A adviser charging ↗
FCA - Ongoing financial advice services review ↗
Advisedly: published financial advice fees research and methodology ↗
