How are financial advisers paid?

Financial advisers can be paid in different ways, depending on the services they provide and how their business operates.

Understanding how advisers are paid helps clarify how advice works in practice and what charges usually relate to.

In the UK, financial advisers must explain clearly how they are paid before providing advice.

Common ways advisers are paid

Most UK financial advisers are paid through fees, rather than commission.

These fees may be charged as:

• a fixed fee

• an hourly rate

• a percentage of assets being advised on

The structure depends on the type of work involved.

What adviser fees usually cover

Fees often reflect:

• analysis and research

• advice and recommendations

• ongoing reviews and support

They are not usually linked to a single product transaction.

Regulation and transparency

UK regulation requires advisers to:

• disclose how they are paid

• explain fees before work begins

• document charges clearly

This allows clients to understand what they are paying for.

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.

How Are Financial Advisers Paid? | UK Adviser Fees Explained

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:

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 final note

This article explains how advisers are paid, not whether advice represents value.

If understanding adviser charges raises questions about how advice fits into your situation, some people find it helpful to think things through before advice or action. Evoa exists for that purpose — before advice and before action.

👉 https://www.thewealth.coach/evoa

Author
Written by Nic Round
Chartered Financial Planner & Chartered Wealth Manager