- Fiona Ettles
- Aug 21
- 3 min read
The Real Story Behind the 18% Jump in Ongoing Advice Fees
By Fiona Ettles, Partner at FinConnect
Why Advice Fees Are Rising (Way) Faster Than Inflation
Recent industry data shows ongoing advice fees have increased by 18% which is well above the current rate of inflation. For some, this might raise questions about whether clients are receiving value for money. From my perspective, these increases are not about chasing higher profits, they are about ensuring advice businesses can continue to operate sustainably.
The reality is that the cost of running an advice practice has changed dramatically in recent years. Professional indemnity insurance premiums have surged, in some cases quadrupling in a single year. Compliance obligations have become more complex and time consuming, and salaries have risen as firms compete for talent.
These are not optional costs. They are the price of doing business in today’s environment. If fees do not keep pace with these realities, profitability suffers. Without profitability, business valuations decline and succession options narrow.
The Profitability Gap
One of the more concerning statistics is that nearly one in five single adviser practices are not profitable. For those firms, succession choices are extremely limited, often reduced to selling a client book under whatever terms the market dictates.
It is also a risky way to operate. If the sole adviser is unable to work for any reason, the entire business can grind to a halt. Without a profitable and scalable model there is little resilience and very little appeal to future buyers or successors.
The Age Factor and the Next Generation
The data also shows that the average adviser is now 52 years old. That means, as an industry, we have about a decade to prepare the next generation of leaders.
My colleague Tim Lane often says that we must see ourselves as custodians of our businesses and the profession. It is our responsibility to ensure they are led by capable people in the future, not simply absorbed into a handful of large national firms.
This requires thinking beyond the short term and making deliberate investments in people, particularly those completing their professional year.
Investing in the Professional Year
The professional year is often longer than its name suggests, sometimes taking 18 months to two years. The financial and emotional investment for a business is significant, often requiring direct training costs of $20,000 to $30,000 per graduate, and the return is not immediate.
To protect that investment, firms need to:
Offer competitive remuneration
Provide strong mentoring and development opportunities
Equip people with technology and processes that keep them current
Create clear and realistic career and potential ownership pathways
Have regular check-ins, form connection and create bonds in your team – so you can retain team members and act quickly in times of cultural clashes
Without these, graduates may be tempted elsewhere and the original investment is lost.
Keeping Fees in Step with Value
From my perspective, these fee increases are not about profiteering. They are about maintaining the ability to deliver high quality advice and run a sustainable business.
Fee increases should be approached strategically. New clients should start at market rates, while existing clients can be moved to those rates over 12 to 18 months with open communication and evidence of the value being delivered.
A Call to Action for Firm Owners
This is a critical time for advice businesses. Rising costs and an ageing adviser base present challenges, but also opportunities for those who take a strategic approach.
The firms that will succeed are those that:
Price their services in line with the real cost of advice
Build scale and resilience
Invest in developing and retaining their future leaders
Plan for succession in a way that protects independence and client relationships
If you are an advice business owner, I encourage you to ask yourself:
Are your fees aligned with the cost of delivering advice
Is your business profitable and scalable
Are you actively building your next generation of leaders
We help owners understand their position in the market, strengthen their model, and plan for the future whether that is succession, sale, or long-term growth. Get in touch if you’d like to chat over your firm’s unique circumstances.
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