Most financial advisers charge a percentage of the assets they manage on your behalf. It sounds modest. Written as a decimal, it's easy to overlook. But percentages compound, portfolios grow, and the pounds accumulate quietly for years.
This article converts that percentage into a number you can actually see, and makes the case for why a fixed fee is a better way to pay for advice.
Think about the last time you took a black cab. You got in, said where you were going, and the meter started. No fare negotiation. No paperwork. Just the number climbing, and a quiet assumption it would be reasonable by the time you arrived.
Most investors have a financial adviser arrangement that works the same way.
The meter started the day you signed on. It runs whether markets are up or down, whether your adviser did ten hours of work this year or one. It doesn't charge a fixed amount: it takes a percentage of everything you've accumulated. The more your wealth grows, and the longer the relationship runs, the more the meter takes. No renegotiation. No extra work.
Nobody hides this. It's disclosed somewhere, in basis points or a small decimal. Small enough to feel negligible.
It isn't.
Most investors have never done this calculation
There's a simple reason most people don't know what they pay their financial adviser in pounds: they've never been told. The fee is expressed as a percentage, shown in a key facts document, then largely left alone. It doesn't appear as a line on a bank statement. It's deducted from your portfolio before you see the balance.
That design suits the industry rather well.
According to the FCA, the average ongoing adviser fee is around 0.8% per year. The same regulator found that the average advised client holds over £150,000 under advice. On that portfolio, 0.8% is £1,200 a year. Most clients couldn't name that figure.
And the industry hasn't rushed to help. Research from 2022 found that 15 of the 20 largest advice firms in the UK had no fee information on their websites at all. You had to ask. Many people don't.
0.8% doesn't sound like much. What it compounds to over ten, 15, 20 years is a different matter entirely.
Percentage fees are commission by another name
In 2012, the Retail Distribution Review banned financial advisers from receiving commission on investment products. It was a genuine reform. Before it, advisers were paid by the providers whose products they sold, creating an obvious conflict: recommend the product that pays most, not the one that suits best.
The commission went. The logic behind it largely didn't.
Percentage-of-assets charging, which now dominates the market, produces the same structural incentive. The more a client invests, the more the adviser earns. The longer the client stays, the more the adviser earns. Nothing about that arrangement rewards the quality of work done. It rewards the size of the pot.
According to NextWealth's 2025 Fee Benchmarking Report, 70% of UK financial advisers still use asset-based fee structures. The reform changed how the money flows. It didn't change whose interests the fee structure serves.
Rob Smith, founder of rockwealth Chiswick, describes this as skeuomorphic design: the tendency for new things to retain the shape of old things long after the old shape has stopped making sense. The original motor car didn't have a steering wheel. For the first 15 years or so, drivers used a tiller, like on a boat, or leather straps, like on a horse and cart. New technology. Old control mechanism. Eventually the steering wheel arrived and nobody argued with it.
Percentage-of-assets charging, Rob argues, is financial advice's tiller. Carried forward not because it's right, but because change takes time.
Here is the number your adviser hopes you will not work out
Let's do the calculation the industry rarely does for you.
The FCA puts the average ongoing adviser fee at 0.8% per year. That's the adviser's cut alone, before platform charges and fund costs. When you include those, NextWealth's 2024 research puts the total all-in cost at an average of 1.89% per year. The same research found that the average advised client holds around £370,000. On that portfolio, the all-in cost is roughly £7,000 in year one alone.
Now run it forward.
The figures below are illustrative, based on a 5% annual gross return assumption. They're not projections or guarantees. But they come from verified industry averages, and they show what compounding does to a percentage over time.
On a £300,000 starting portfolio, the adviser fee alone (0.8%) costs around £113,000 over 20 years. The all-in cost of 1.89% costs around £242,000. On £400,000, those figures become roughly £151,000 and £323,000. On £500,000: around £188,000 and £404,000.
Read those numbers again. Slowly.
That is not the return your portfolio failed to generate. That is the amount extracted from it, in charges, while it was growing. The meter running while you sat in the back, assuming the fare would be reasonable.
For most people, these aren't abstract sums. They're the difference between a retirement that feels secure and one that requires careful rationing. A second property. A decade of school fees. A legacy that doesn't materialise. Expressed as a percentage, invisible. Expressed in pounds, hard to ignore.
The 1.89% all-in figure is worth unpacking. The adviser fee is typically the smallest component. Platform charges and fund costs make up the rest, and if those funds are actively managed, the total climbs higher still. A fixed-fee financial planner using low-cost index funds starts from a much lower cost base.
By the time most passengers check the meter, the fare has climbed higher than they expected. The question is what you do when you finally look.
There is a word for professionals who do not charge this way
Rob Smith has a direct way of framing this. "If you charge ad valorem, you are in an industry," he says. "If you charge fixed fees, you are a professional."
It's a provocation. But it holds up.
When you instruct a solicitor to write a will, they charge for the work: the hours, the complexity, the expertise applied to your situation. Nobody proposes charging 0.5% of your estate's value for the drafting. The fee would have nothing to do with the task. A straightforward will and a complicated one require different amounts of work. The size of the estate is largely irrelevant.
The same logic applies to financial planning. The work involved in building a plan, reviewing it annually, and adjusting it as circumstances change doesn't double because a client's portfolio has doubled. The knowledge required is the same. The hours are similar. The percentage fee isn't.
Percentage charging doesn't measure the value of advice. It measures the size of the pot. And it rewards advisers for persuading clients to put more into that pot, whether or not more investing is the right answer.
That conflict is structural. It exists whether or not any individual adviser acts on it. Fixed fees remove it entirely.
What fixed-fee advice actually changes
When a financial planner's income isn't tied to the size of your portfolio, there's no built-in reason to recommend you invest more than you need to.
Rob Smith is direct about this. rockwealth Chiswick, he says, "is not incentivised to recommend you invest more. For many people, not investing more is the correct option." That sentence is almost impossible for a percentage-fee adviser to say cleanly. The conflict doesn't have to be conscious to be real. It's baked into the billing model.
But the consequences go further. A financial planning relationship built around fixed fees can address the full picture: what you need, what you have, whether your current arrangements are working, and where the genuine gaps are. The investment component matters. It isn't the whole conversation.
It also changes what the investment conversation looks like. The Nobel laureate William Sharpe demonstrated in 1991 that active fund managers in aggregate must, as a matter of arithmetic, underperform the market before costs. Once you accept that, the question of what to invest in largely answers itself. The plan becomes the work, not the product.
According to NextWealth's 2025 Fee Benchmarking Report, clients paying fixed fees are 19% more likely to say they receive excellent value than those paying asset-based fees. That gap isn't incidental. It's what you'd expect when the fee structure stops pulling in the opposite direction from the client's interests.
How to tell whether a fixed-fee financial planner is right for you
The calculation isn't complicated. Most people haven't been prompted to do it.
Start with three questions. Ask your current adviser to answer all of them in writing.
First: what am I paying in total each year, in pounds? Not a percentage. Pounds. The figure should cover the adviser fee, the platform charge, and the underlying fund costs. If your adviser can't produce a single consolidated number, that's informative in itself.
Second: how does that total change as my portfolio grows? If the answer is "it rises in line with your assets," ask why. Managing a larger portfolio isn't proportionally more work than managing a smaller one. If your fees are growing faster than your service, the arrangement deserves scrutiny.
Third: what would I pay under a fixed-fee model for an equivalent service? The comparison won't always favour fixed fees for smaller portfolios. For anyone holding £400,000 or more under advice, the arithmetic generally shifts.
There's also a regulatory angle. The FCA's Consumer Duty, which came into force in 2023, requires advisers to demonstrate their charges represent fair value. You're entitled to ask for that in writing. Any adviser confident in their pricing will have no difficulty providing it.
The conversation worth having before the meter gets any higher
The meter has been running since the day you signed on. It will keep running until you decide to check it.
That's not a criticism of anyone who hasn't. The industry isn't designed to make it easy. Fees are expressed in decimals, deducted invisibly, and rarely translated into the figures that would prompt a harder conversation. Most investors haven't been given the numbers to work with.
You now have them. You have the questions too. What you do with them is up to you.
If you live in West London and want to understand what a genuinely different arrangement looks like, rockwealth Chiswick charges fixed fees and isn't incentivised to recommend you invest more than you need to. Sometimes the most useful conversation a financial planner can have with a client is the one that starts with: actually, you're fine.
That conversation is worth having. Before the meter runs any higher.
