How are financial advisers paid?
- Nic Round: Chartered Wealth Manager
- Feb 13
- 3 min read
Updated: 1 day ago
In the UK, financial advisers are paid through agreed fees rather than hidden commissions on most retail investment products. But the structure of those fees can vary, and understanding how payment works can help you assess transparency and suitability.
Behind this question are often quieter concerns:
Are advisers incentivised to sell products?
Is there commission involved?
Do fees influence recommendations?
How do I know payment is fair?
Clarity about how advisers are paid helps build confidence before any engagement begins.
The modern UK advice model
Since the Retail Distribution Review (RDR) reforms, most UK financial advisers are paid through clearly disclosed fees agreed with the client.
This means:
Charges must be explained upfront.
Clients must agree to the cost.
Commission on new retail investment products is largely banned.
The intention is transparency.
The three common ways advisers are paid
1. Percentage of assets
Many advisers charge a percentage of the money they advise on.
This might include:
An initial advice fee
An ongoing annual servicing fee
For example:
£400,000 invested
0.75% annual fee
£3,000 per year
This structure aligns adviser income with the size of the portfolio, though it also means fees increase as assets grow.
2. Fixed fees
Some advisers charge a fixed amount for specific work, such as:
Retirement planning
Pension transfer analysis
Inheritance tax planning
Investment restructuring
A fixed fee provides cost certainty, regardless of portfolio size.
3. Hourly rates
Less common for ongoing wealth management, but sometimes used for:
One-off consultations
Technical planning
Second opinions
This structure resembles professional billing in law or accountancy.
What about commission?
For most modern investment and pension advice in the UK:
Upfront commission on retail investment products is no longer standard practice.
Mortgage and protection advice may still involve commission structures, depending on the product.
If commission applies, it must be disclosed.
Understanding which services are fee-based and which may involve commission helps clarify incentives.
Does the payment structure influence advice?
This is often the real question.
Different payment models can create different incentives.
For example:
A percentage-based fee grows as assets grow.
A fixed fee does not change with portfolio size.
Commission-based models may reward product placement.
The important factor is transparency and suitability, not simply the label attached to the fee.
A more useful way to think about it
Rather than asking only:
How are financial advisers paid?
A more practical question might be:
Does the payment structure align with the kind of support I need?
Some people value ongoing oversight.Others prefer defined project-based planning.
Understanding how payment works helps you assess fit.
Some of the most common practical questions people ask about how financial advisers are paid are below.
Do financial advisers earn commission in the UK?
For most retail investment advice, commission was largely removed under regulatory reforms. Some areas, such as mortgages or protection policies, may still involve commission, which must be disclosed.
Are financial adviser fees deducted from investments?
Often, adviser fees can be paid from investment or pension accounts, though the client must agree to this structure.
Is percentage charging better than fixed fees?
Neither is inherently better. Suitability depends on complexity, asset size and the type of ongoing service required.
Do advisers get paid more if my investments grow?
If charging a percentage of assets, adviser income rises as portfolio value rises. This aligns revenue with asset growth but increases absolute fees over time.
A calm place to think first
If you are reviewing how advisers are paid, you may not need immediate action.
Often the most helpful first step is to clarify:
What kind of support you are seeking
Whether ongoing service is necessary
Whether transparency feels sufficient
Evoa exists to provide that quiet thinking space — before advice, before action.
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