MEDIA RELEASE: The cost of providing financial advice and associated documentation continues to rise, contributing to the rapidly increasing cost of financial advice for Australians, according to the Padua Advice Fee Data Report FY 2022.

“Initial advice fees charged by advisers on a per advice document basis increased from $2,859 in FY21 to $3,315 in FY22 – an increase of 16 per cent,” Padua Solutions co-CEO and co-founder, Anne-Marie Esler, said.

“It’s no wonder the high cost of financial advice is frequently cited by Australians as the main reason for not seeking advice – especially when advice fees can rise by more than double the current rate of inflation,” she added.

Meanwhile, ongoing advice fees charged by advisers on a per advice document basis rose from $3,656 in FY21 to $4,865 in FY22 – a significant increase of 33 per cent.

The annual Padua Advice Fee Data Report is actual advice fee data aggregated from the 5 per cent of financial advisers using Padua’s software and services. Padua institutional, licensee and advice practice clients benefit from being able to access data dashboards that visualise this actual and objective advice data in real-time.

Ms Esler noted that financial advice fees have also risen as the regulatory burden on financial advisers has increased, requiring them to devote more time to ensuring advice documentation adheres to compliance requirements.

Further, since the end of 2018, financial adviser numbers have fallen by 43 per cent from 27,929 to 15,908 (as at 6 October 2022), placing further pressure on the sector.

“The mass exodus of advisers from the financial advice industry has only exacerbated existing concerns around the cost and accessibility of advice,” she said.

“If we as an industry don’t work towards reducing the cost of providing advice, it will become increasingly inaccessible for most people, and especially those who would potentially stand to benefit most from financial advice,” she said.

According to Padua Solutions co-CEO and co-founder, Matthew Esler, technology has the capacity to improve the accessibility of advice for all by automating key processes and enabling financial advisers to do more with their time.

“This starts with a client’s fact find and goes right through to using algorithms to determine which advice strategies would be best suited for a client and the actual monetary benefit of each strategy for that client.

"As an example, advisers who use our software can generate Records of Advice (RoA) in 15 minutes for a cost of $125, and simple Statements of Advice (SoA) in 30 minutes for a cost of $250 through our DIY capability. Complex SOAs average $575 through our services,” he said.

Mr Esler pointed to the recently released Quality of Advice Review Consultation Paper, where review head Michelle Levy prioritised accessibility of advice by putting forward several proposals that simplified reporting requirements on advisers and the cost of running an advice business.

"These are important proposals, but we also believe the cost of running an advice business - and therefore the cost of financial advice to the end user - can already be reduced today by finding the right technology partner. Automating as much of the technical components of providing financial advice should be viewed as a priority in the future viability of the advice industry," Mr Esler said.