Neither ASIC nor the FPA have any set guidelines for how much a financial planner can charge, aside from the requirement that the types of fees and commissions that may be charged should be disclosed in a general sense in the FSG and specifically in dollar and percentage amounts in a Customer Advice Record.

Some financial planners charge an hourly rate, not just for the interview but also for other time spent writing the plan and doing research.

Others charge a fixed fee.

Some charge a fee as a percentage of the amount of funds invested.

Others do not charge any fee at all, but accept commissions from fund managers.

There is not necessarily a strong connection between the quality of advice given and the fees charged, however the quality of advice given by a good financial planner can more than make up for higher charges.

There is some anecdotal evidence that the financial planning industry as a whole is moving toward a fixed fee system. Although many clients are very happy that the financial planner accepts commissions from fund managers (thus saving themselves having to worry about another bill), for others there is always a suspicion that any transaction based remuneration scheme may be inherently biased toward moving people in and out of investments, such suspicions may or may not have any element of truth to them, there are many financial planners who adhere to the highest ethical standards who charge commissions.

As far as which fee model is best for clients, obviously a fixed fee for service without any trail commissions is likely to lead to the fewest conflicts of interest from the adviser's point of view, though fee for service is not by itself sufficient to automatically guarantee good advice and good service.

Commission based advice can be ok as long as you understand its limitations (a commission based adviser would almost never tell you to pay off your mortgage and then put your savings into index funds, for example). Probably the most annoying form of fee structure (as revealed by Financial Planning Association surveys of consumers) is the combination of fee for service and commissions in one. First the adviser charges you two grand for a financial plan, then he takes a commission. I can't see how that benefits the client, though for the adviser there is the golden opportunity to get paid twice!

Strict rules concerning "churning" insist that a financial planner be able to defend his reasoning about why any transaction be made. Churning means excessive transactions, which leads to more commissions, usually to the detriment of the client. Unfortunately in practice only extreme violations of this rule are prosecuted, the occasional gratuitous rollover is churning but not likely to attract much attention from ASIC. Only chronic high volume churning is ever followed up, which means many advisers will recommend rollover over your super to one they can look over even if it isn't strictly in your best interests to do so. You should try out many financial planners before doing anything and only ever work with one that you believe adheres to the very highest ethical standards, going to a famous dealer group will not guarantee this because ethics is a personal thing, not a corporate thing.

In addition to the individual payment types, financial planners may charge a combination of the various fees, it is entirely up to the financial planner, and the fees may or may not be negotiable.

Total fees may run from a couple of hundred to tens of thousands of dollars. The cheaper one will get the average married, working couple a very simple plan that ignores most aspects of financial planning but tells you to invest in some fund they are pushing. I generally don't think you get good value from this end of the market because if you want cheap rollovers you can do that on the Internet. The upper end represents a few weeks of work by an experienced, specialist financial planner composing an intricate and high powered financial plan for an executive with a high salary, but whose time is better spent on his professional work rather than dabbling in the markets. Even a $20,000 financial plan is not overpriced if it saves an extremely well compensated individual $100,000 in tax and averts possible disaster with issues like estate planning and risk management. A good financial plan should pay for itself easily. This is the only worthwhile valuation indicator of a financial plan.

Financial planners may have involvement running from a one-off problem solving plan through to an ongoing relationship where a busy worker employs a financial planner to professionally manage his financial affairs, alongside his permanent accountant and lawyer. Firms generally specialise in a narrow range of services, it is unusual for a firm that sees mostly domestic clients also work on big corporate salary packages and all that sort of thing.

One thing that I will point out is that most fees are negotiable down to zero. While you should of course not expect someone to work hard on your behalf when you have no intention of paying that person, it would be quite unusual for a planner not to have at least some leeway to move about and discount fees, even if the prospectus says the fund has a 4% entry fee, I haven't encountered one yet that doesn't allow this to be cut significantly. For the record, some insurance products also allow commission discounting, and the savings to the client can be huge. (In practice though, you can generally get a better deal on most insurance products with a "group rate", many super funds offer this, even full commission group rate insurance is cheaper than cut commission retail insurance, though the commissions for group rate insurance are pretty low to start with).

Some financial planners customarily charge full fees even for basic services. A superannuation rollover or simple placement into a retail managed fund is a trivial matter, requiring only a few minutes of paperwork. Of course the "know your client rule" means the planner has to go through your finances in detail first, and this takes time, but if you make your wishes clear from the beginning you should negotiate a small fee. ("I have $15,000 in 6 different super funds, I require no advice other than a recommendation on a rollover fund to consolidate these, I don't know where to begin or which fund suits me, but if you want to skip the estate planning stuff, budgeting, insurance and mortgages, I'll be happy to hear what you have to say about the sort of funds I should be looking at.")

If you have lots of funds requiring rollovers, the planner will be stuck on hold for about an hour waiting to talk to all the trustees to get your account balance and arrange the rollover papers to be sent, not to mention faxes flying back and forth and various delays while the papers are processed, which is now more of a problem than ever since the new privacy legislation was passed and managers all became even more bureaucratic. If you want to save his time you can find this information out yourself then present it to him, then say quite clearly what sort of advice you want. If you only have simple needs and the order isn't a difficult one the planner could probably get away with just filling in a "Customer Advice Record" as a miniature financial plan and get you to sign the forms. If he charges more than 1 or 2% for that he's probably overcharging. I've seen a lot of plans done with 4 or 5% entry fees when the service performed was a particularly trivial one, like a simple rollover. I could live with this if the sum to invest was $1,000, but for $50,000 rollovers I think these fees are too steep.

You might even be able to do a deal with the financial planner if you are seeking out a great many services. The commissions on most life insurance products are excellent, much better in most cases than investments and rollovers. A common deal might be to get 100% rebates on the entry fees and no ongoing trail commissions for your super or investment if you buy your income protection insurance through him. There are some products, usually insurance products, where there is no discount available by cutting commissions. If the insurance product makes sense you could negotiate a free entry into a fund (and rebate all trail commissions as well, something the discount brokers won't do).

Some aus.invest readers, rather jealous of the "big fat commissions" planners supposedly make have suggested that the way to go is to have a financial planner prepare a full financial plan and then the run off to a discount broker to set up the suggested investments.

While I do enjoy giving poor quality advisers and outright shonks a hard time, I think that any adviser who's advice is worth taking should not be treated in this manner, this is a form of shoplifting! It is never ok to deliberately waste the time of someone honestly trying to earn a living. Financial planning combines the hard work and uncertainty of a sales position with all the research and number crunching that an accountant needs to do, it is in fact a very difficult profession and involves plenty of hard work and very long hours. (For the record, I've never had that happen to me, in part because many of the funds I use cannot be bought directly by a member of the general public, and partly because as a fee for service adviser I bill the client for preparing their plan, instead of taking commissions - that's a free business tip for any financial planners reading this!)