Is a 1.5% financial adviser fee too high?

Show the cash impact

1.5% is £3,000 on £200,000 and £7,500 on £500,000. These are simple illustrations. Ask the firm to calculate your actual charge, including tiers, minimums and the assets included.

Check whether 1.5% is an adviser fee alone or a combined figure that includes platform and investment costs. If it is only the adviser fee, the total may be materially higher.

• Ask forYear-one cost, normal ongoing cost and the cost if assets rise or fall.
• Ask whyWhich specific planning, access or investment responsibilities justify the fee compared with alternatives?

Challenge the structure respectfully

Ask whether the firm offers a tiered rate, cap, fixed planning fee, one-off project or lighter review service. A firm may not change its structure, but the answer helps you understand what is negotiable and what is not.

Do not negotiate away essential work without understanding the suitability consequences. A cheaper arrangement can be false economy if it leaves an important decision unaddressed.

• AlternativeA one-off plan followed by self-directed implementation or periodic reviews.
• AlternativeA specialist adviser for a defined retirement, business or inheritance decision.

Decide on evidence

If you continue, record the service you expect and the review point at which you will reassess it. If you decline, keep the comparison; it can improve the next conversation.

Ask what would justify a substantial recurring fee

At 1.5%, the cash amount deserves a detailed conversation. Ask the firm to show the calculation at your asset value, explain whether it is tiered and separate adviser cost from every underlying investment and platform cost.

Then describe the responsibilities you are transferring. If the firm is coordinating retirement income, complex family assets, business proceeds and investment decisions, the work may be broader than a portfolio review. If it is not doing those things, the scope needs a closer comparison.

Request alternatives without assuming a discount. A fixed planning project, capped fee, staged advice or periodic review may be available. Ask what work would be removed and whether that changes suitability or your own responsibilities.

Imagine a quiet year and a difficult year. In the quiet year, what active review, access and monitoring occur? In the difficult year, who responds, what decisions are made and what additional fee applies? This reveals whether the fee buys capacity or merely a recurring entitlement.

If the service remains expensive but clearly defined, decide using the total cost and your need for responsibility. If the explanation is vague, do not let the size of the portfolio create an assumption that a large fee must be justified.

• CalculationWhat is the exact annual cash fee now and at different asset values?
• What the service includesWhich complex decisions and responsibilities are actually included?
• AlternativesWhat staged, capped or one-off service could address the same need?
• Extra workWhen does a change move outside the recurring fee?
• EvidenceWhat written service promise will you use to review value?

Your 1.5% challenge record

Calculate 1.5% in pounds at the balance being advised and add every other cost. Ask why the rate applies, whether it is tiered and whether the same work could be staged or capped.

List the responsibilities transferred: complex planning, investment decisions, family wealth, business proceeds, access and monitoring. If the list is short, compare the fee with a focused one-off project.

Ask what happens in a quiet year and a difficult year. You should know what active work is included, what triggers an additional charge and how fast the adviser responds when a decision matters.

Keep the written explanation and set a review point. A substantial fee may still be a poor fit if it continues without a clear service, and a lower rate may be false economy if it removes essential work.

• AmountWhat is 1.5% in pounds at your assets?
• ReasonWhich responsibility makes the fee proportionate?
• OptionsCould staged or capped advice work?
• ExtrasWhen does more work cost more?
• ReviewWhat evidence supports continuation?

Require a specific case for a higher percentage

Start with the annual pounds and include every layer. At £250,000, a 1.5% adviser charge is £3,750 before platform and investment costs; at £500,000 it is £7,500. Check the precise asset base, tiers, minimums and caps rather than applying the headline rate to the wrong figure.

Ask which complexity supports the rate. Detailed retirement-income planning, business-sale coordination, family governance or unusually hands-on work can require more time, but the proposal should name the responsibility and deliverable. A broad reference to personalised service is not enough to make the comparison useful.

Explore alternative structures. The work might be separated into a fixed-fee planning project, implementation and a lighter recurring review. Ask whether assets that do not need active management can be excluded and whether the percentage falls as the balance increases.

Test the annual service in a year when little changes. Identify the meetings, planning updates, risk work, reporting and access that still occur. Then test an eventful year and note which tasks are included or separately priced. This prevents the fee being justified only by hypothetical support.

Set a review and exit point before agreeing. Keep the service schedule, cash illustration and cancellation terms. A high fee is not automatically unsuitable, but the evidence needed to justify it should be correspondingly clear.

Compare the proposal with the smallest service capable of solving the problem. If a one-off plan would answer the decision, quantify the extra responsibility bought by the recurring percentage. If active monitoring is essential, identify the events and actions that make the recurring work valuable.

Do not let a higher fee create an assumption of better performance. The comparison should rest on scope, evidence, service and fit. Investment outcomes remain uncertain, and a more expensive arrangement still needs a suitable recommendation and transparent costs.

Ask whether the percentage covers planning for assets that are not moved to the firm. If important pensions, cash or business interests remain outside the charged portfolio, the engagement should still explain whether they are considered in the advice and who monitors them.

Before proceeding, compare at least one materially different service model. The purpose is not to force the lowest price; it is to understand whether the proposed breadth and recurring responsibility are necessary for your decision.

Ask what makes the proposed service more intensive

At a higher recurring rate, ask the adviser to connect the price to specific work and responsibility. Complex circumstances can require substantial professional input, but complexity should be explained rather than used as an undefined justification.

An unchanged £300,000 at a fictional 1.5% adviser charge costs £4,500 annually before underlying charges. At £600,000 it costs £9,000 if the same rate applies throughout. Ask whether the work doubles with the assets, whether tiers or a cap apply and whether a fixed project plus later reviews could address the need.

Check whether the headline includes other services that competing quotes charge separately. A combined planning and investment-management figure cannot be compared directly with an advice-only rate. Conversely, a 1.5% adviser layer should not be mistaken for the total portfolio cost.

Request an equivalent written alternative before deciding. A carefully scoped comparison is more useful than accepting or rejecting a service because its percentage sits above an informal rule of thumb. Avoid relying on a promised return to justify the charge; investment outcomes remain uncertain.

Your decision checklist

• Translate 1.5% into pounds
• Separate adviser and underlying costs
• Ask for tiers, caps and one-off options
• Record the service and review point

When you may need personal advice

A high percentage is not automatically misconduct or unsuitable. Value depends on the advice, complexity, responsibility and total cost.