Fee-Only vs Commission: Which Financial Consultant Model Actually Saves You More?

Updated for 2026.

Fee-only financial advice sounds cleaner than commission-based advice.

You pay the consultant directly. They do not earn money from the product they recommend. The incentive appears easier to understand, and the advice feels less likely to be shaped by a sale.

That does not automatically make fee-only advice cheaper.

A consultant charging 1% of your investments every year may collect far more than someone receiving a one-off commission on an insurance policy. A flat-fee adviser may save a high-balance client thousands, yet feel expensive to someone who needs help with one small decision.

According to my research into the current Australian financial-advice rules, the useful comparison is not simply “fee versus commission”. You need to compare the total dollar cost, the services received, the products used and the incentives sitting behind the recommendation.

That is where the real answer tends to appear.

General information only: Financial-advice costs and legal obligations depend on the service, product, client type and adviser’s licence. This article does not recommend a particular adviser or payment model. Read all fee documents and consider independent legal or financial guidance before signing an ongoing arrangement.

The quick answer: which model usually saves more?

For broad financial planning, a transparent fixed fee or hourly fee will often be easier to compare and may cost less over time, especially when you have a large investment or super balance.

For a narrow product need, commission-based advice can reduce the amount you pay upfront. That does not mean the advice is free. The payment may be built into the insurance premium or another product cost.

Neither model wins every time.

Your situation	Model that may cost less	What to check
One specific financial question	Hourly or fixed-fee advice	Minimum charges and preparation fees
A large portfolio needing occasional advice	Fixed fee rather than an asset-based percentage	Whether ongoing management is genuinely needed
Complex planning with regular reviews	Fixed annual fee or negotiated ongoing fee	Exactly which services are included
Life or income protection insurance	Commission or fee-for-service, depending on the policy and quote	Premiums, commission, advice fees and policy quality
A small amount to invest	One-off advice or lower-cost limited advice	Whether a full financial plan is necessary

The cheapest quote can still produce an expensive result if it places you in a poor product, cancels useful insurance or charges fees for work you never receive.

What “fee-only” actually means

A fee-only consultant is paid directly by the client rather than receiving commissions from the financial product being recommended.

The fee may be charged as:

A flat amount for a financial plan.
An hourly rate.
A project fee for one defined piece of work.
A monthly or annual ongoing fee.
A percentage of the assets managed or advised on.
A combination of these methods.

This last point is often missed.

A consultant can describe their service as fee-only while charging a percentage of your portfolio every year. They may receive no product commission, but their income still rises as more of your money moves under their management.

Fee-only describes where the consultant’s payment comes from. It does not tell you whether the amount is low, whether the advice is suitable or whether the consultant has no conflicts.

What commission-based advice means

A commission-based consultant receives payment connected with the sale or continuation of a financial product.

The product provider, rather than the client’s bank account, may send the payment to the adviser or advice business.

Possible commission arrangements include:

An initial payment when an insurance policy begins.
An ongoing payment while the policy remains active.
A payment connected with the amount of premium paid.
A payment linked with the sale of an eligible product.

Australia restricts conflicted remuneration for financial product advice. Many investment and superannuation commissions that were once common are no longer permitted under the current rules.

Commissions can still apply to some insurance products. An adviser giving personal advice about relevant insurance must obtain the required informed consent before receiving certain commissions.

The Australian Securities and Investments Commission explains the current conflicted-remuneration framework in Regulatory Guide 246. Its insurance commission consent guidance sets out the informed-consent requirements.

Fee-based is different from fee-only

You may also hear the term “fee-based”.

It can describe a consultant who receives direct client fees and certain commissions or other product-related payments.

For example, the adviser might charge:

A fixed financial-planning fee.
An annual review fee.
An insurance commission.

That does not automatically make the arrangement improper. It does mean you need a complete picture of every payment.

Ask for the following in dollars:

What you pay directly.
What is deducted from your investments or super.
What the product provider pays.
What related businesses receive.
What continues each year.

The label on the consultant’s website is less useful than the dollar amounts in the fee disclosure.

How fee-only consultants get paid

Flat advice fee

A flat fee covers an agreed piece of advice.

You might pay one amount for:

A retirement plan.
A superannuation review.
An investment strategy.
A redundancy plan.
An insurance review.
Advice after receiving an inheritance.

The advantage is certainty. You know the price before the work begins.

The problem appears when the scope is vague. A quoted fee of $4,000 may cover the written plan but exclude implementation, product fees and later questions.

Ask what happens after the Statement of Advice is delivered.

Hourly fee

An hourly model can work well when the problem is narrow.

You might need two hours to discuss:

Whether to pay down debt or invest.
How to organise several super accounts.
A contribution strategy.
A second opinion on existing advice.

Hourly advice can become expensive when substantial research and document preparation are required.

Ask for an estimated range before work begins. Also ask whether telephone calls, emails, preparation and administration are billed at the same rate.

Asset-based fee

An asset-based fee is calculated as a percentage of the portfolio managed or advised on.

A fee of 0.8% may sound small. The dollar amount tells a clearer story.

Assets under advice	Annual fee at 0.50%	Annual fee at 0.80%	Annual fee at 1.00%
$100,000	$500	$800	$1,000
$300,000	$1,500	$2,400	$3,000
$500,000	$2,500	$4,000	$5,000
$750,000	$3,750	$6,000	$7,500
$1,000,000	$5,000	$8,000	$10,000

Our data shows why the word “percentage” can soften the appearance of a large fee. At 0.8%, a $1 million portfolio produces an annual advice charge of $8,000 before product, platform and investment costs.

The work may not double when your balance rises from $500,000 to $1 million, yet the fee doubles.

Ongoing fixed fee

An ongoing fixed fee may cover regular reviews and access to the adviser during the year.

The agreement could include:

An annual strategy meeting.
Portfolio reviews.
Contribution planning.
Retirement-income updates.
Insurance reviews.
Telephone or email support.

The arrangement can work well when those services are actually needed and delivered.

It becomes poor value when the adviser collects a monthly payment for sending a generic annual email.

How commission costs reach you

A commission may be paid by an insurer, but the money does not appear from nowhere.

The product provider prices distribution costs into its business model. Those costs can affect premiums and the overall amount customers pay.

That does not mean a commission policy must always cost more than a fee-for-service policy. Insurance pricing depends on the insurer, cover, age, health, occupation, waiting period and policy terms.

You need two comparable quotes:

The cost where the adviser receives a commission.
The cost where the commission is reduced or removed and you pay an advice fee separately.

Compare the same cover. A cheaper policy with narrower definitions, more exclusions or a shorter benefit period is not an equal comparison.

Commission does not mean the advice is free

This is the most persistent misunderstanding in the debate.

A client may hear:

You do not need to pay me. The insurer pays my commission.

That statement may describe the payment path, but it does not settle the cost question.

You should ask:

How much commission will be paid in the first year?
Will another commission be paid later?
Does the premium change if the commission is removed?
What happens to the commission if the policy is cancelled?
Would the adviser recommend the same policy on a fee-for-service basis?

Moneysmart’s financial advice costs guide confirms that advisers may receive commissions on some insurance policies and recommends asking how those payments affect both costs and advice.

Why fee-only advice can save more

The payment is easier to see

A direct fee is uncomfortable because you see the money leaving your account.

That discomfort can be useful.

You are more likely to ask what work is included when an adviser requests $4,000 than when the same economic cost is spread through products and accounts.

Product recommendations are less connected with sales payments

A fee-only adviser does not earn more merely because an insurer or product provider pays a larger commission.

This removes one source of conflict.

It does not remove every conflict. An asset-based adviser may still benefit when you invest rather than repay your mortgage, withdraw money or purchase property outside the portfolio they manage.

Fixed fees may favour larger balances

Suppose two advisers provide similar ongoing services:

Adviser A charges a fixed annual fee of $4,000.
Adviser B charges 0.8% of assets.

Portfolio	Fixed fee	0.8% asset fee	Difference
$250,000	$4,000	$2,000	Asset fee is $2,000 lower
$500,000	$4,000	$4,000	Same cost
$750,000	$4,000	$6,000	Fixed fee is $2,000 lower
$1,000,000	$4,000	$8,000	Fixed fee is $4,000 lower

Once the balance moves above $500,000 in this example, the fixed fee becomes cheaper.

That does not prove the fixed-fee adviser offers better advice. It shows why high-balance clients should convert percentages into dollars.

Where fee-only advice can cost more

Fee-only is not a magic discount.

A simple need may trigger a full planning fee

You may want one insurance policy, yet the adviser insists on a full financial plan costing several thousand dollars.

A commission model could require little or no direct upfront payment.

The question becomes whether the extra planning work adds enough value to justify the fee.

Hourly work can expand

A task expected to take four hours might require twelve after the adviser reviews old pensions, tax records and insurance contracts.

Request approval before the adviser exceeds the agreed estimate.

Ongoing fees may continue after the work becomes routine

A financial plan can require considerable work in the first year.

Later years may involve fewer changes. Paying the same amount indefinitely may not make sense when your circumstances remain stable.

Asset-based fees rise automatically

Your fee can rise because markets increased the portfolio, even when the adviser completed no extra work.

Ask whether the percentage falls as the account grows or whether a fee cap applies.

A worked five-year comparison

Consider a client with $600,000 under advice.

One consultant charges a fixed $4,500 each year. Another charges 0.85% of the portfolio. To keep the example simple, assume the balance stays at $600,000.

Model	Annual advice fee	Five-year advice cost
Fixed fee	$4,500	$22,500
0.85% asset fee	$5,100	$25,500

The fixed-fee arrangement costs $3,000 less over five years.

If the portfolio grows, the asset-based gap could become larger. If the balance falls, the percentage fee will fall too.

This calculation excludes investment fees, platform costs, tax, insurance and implementation charges. Those amounts must be added before deciding which arrangement costs less overall.

Do not confuse “fee-only” with “independent”

In Australian financial services, words including “independent”, “impartial” and “unbiased” are restricted.

A financial advice business generally cannot use those descriptions unless it satisfies the legal conditions concerning commissions, benefits and conflicts.

An adviser may receive no commissions and still be unable to call themselves independent because of ownership, associations or another conflict.

ASIC has explained the restrictions in its guidance on the use of the term “independent”.

Do not infer independence from “fee-only”. Ask whether the business legally describes itself as independent and what evidence supports that claim.

Personal advice still carries legal duties under either model

A commission does not cancel an adviser’s duties. A direct fee does not prove those duties were met.

When a licensed adviser gives personal advice to a retail client, the advice process is subject to legal obligations. These can include acting in the client’s best interests, giving appropriate advice and giving priority to the client where interests conflict.

The consultant should still:

Understand your financial position.
Ask about your goals.
Consider reasonable alternatives.
Explain risks and disadvantages.
Disclose fees and relevant benefits.
Provide the required advice documents.

Our article on what financial consultants are legally obligated to do explains these responsibilities in plain English.

Ongoing fees need renewed consent

An adviser cannot assume that an ongoing fee arrangement should continue forever.

Under the current rules, advisers must seek written consent each year before continuing to charge ongoing advice fees. The client should receive information about the services to be provided and the fees expected during the upcoming period.

Moneysmart explains the annual consent process in its guide to working with a financial adviser.

Before renewing, ask:

Which services did I receive last year?
Which services will I receive this year?
Has the fee changed?
Why do I still need an ongoing arrangement?
Could I move to one-off reviews instead?

You can end an ongoing arrangement. Check the agreement for notice terms and cancel any fee authorities connected with the service.

Fees taken from super deserve extra attention

An advice fee deducted from super may feel less painful because it does not come from your everyday bank account.

It still reduces your retirement balance.

A $3,000 fee taken from super removes $3,000 and the investment returns that money might otherwise have earned.

Check your super transaction history for descriptions including:

Adviser service fee.
Advice fee.
Ongoing service charge.
Implementation fee.
Member advice fee.

Ask for the written request or consent authorising each deduction.

Look beyond the consultant’s fee

The advice charge is one line in a larger bill.

A recommended strategy may also involve:

Platform administration fees.
Investment management fees.
Performance fees.
Buy and sell spreads.
Brokerage.
Insurance premiums.
Transaction charges.
Tax consequences.
Costs of leaving existing products.

A consultant who charges $2,500 but recommends expensive products may cost more than one charging $4,000 and using lower-cost investments.

Compare the first-year and ongoing totals.

Cost to request	First year	Later years
Advice fee	$	$
Implementation fee	$	$
Platform fees	$	$
Investment costs	$	$
Insurance premiums	$	$
Commissions paid	$	$
Other transaction costs	$	$
Total	$	$

For a wider breakdown, read what financial consultants cost and what you should receive.

Which model suits a beginner?

A beginner with a small balance may not need an expensive ongoing arrangement.

Consider:

A one-off consultation.
Limited advice covering one decision.
An hourly session.
A fixed-fee plan with no ongoing commitment.

Commission-based insurance advice may reduce the direct upfront cost, but ask for the exact commission and a comparison with a fee-for-service option.

A beginner should be wary of paying a percentage of assets indefinitely for a portfolio that needs little maintenance.

Which model suits a high-balance investor?

People with large portfolios should examine asset-based percentages closely.

A 1% fee on $1.5 million is $15,000 each year.

The investor should ask what work justifies that amount and whether a fixed annual fee is available.

A high balance does not always mean the advice is proportionally more complicated.

It may justify extra tax, estate and retirement work. The consultant should explain that work rather than assuming the portfolio size settles the price.

Which model suits someone buying insurance?

Insurance is one area where commissions remain part of many advice arrangements.

Compare:

The commission received.
The premium with commission.
The premium without commission, where available.
Any separate advice fee.
The policy definitions.
Benefit amount and duration.
Exclusions.
Premium structure.

Do not remove commission from the policy and then forget to include the adviser’s separate fee. Compare the complete cost under both approaches.

A lower-cost insurance arrangement is not useful if the cover does not match your occupation, income or family needs.

Which model suits someone approaching retirement?

Retirement planning can require more work than a single product recommendation.

The adviser may need to consider:

Super contributions.
Pension accounts.
Tax.
Investment risk.
Age Pension interaction.
Household spending.
Estate arrangements.
Insurance changes.

A fixed project fee can make sense for the initial retirement plan. Later, you might choose an annual review rather than a permanent monthly payment.

An ongoing service may still suit households that want regular portfolio management and strategy changes. Ask what will happen in quiet years when little needs to change.

Questions that expose the real cost

Ask every consultant the same questions so the answers can be compared.

How are you and your licensee paid?
Do you receive commissions or product-related benefits?
What will I pay in the first year?
What will I pay in later years?
Can you show every amount in dollars?
Which costs are paid directly by me?
Which costs are deducted from products or super?
Does your fee increase when my balance rises?
What services are included?
Which services cost extra?
Can I purchase one-off advice without ongoing service?
What lower-cost alternatives did you consider?
How do I cancel the arrangement?
What commission would you receive on the recommended insurance?
Would your recommendation change if the commission were removed?

Take the answers away before deciding.

Our checklist of questions to ask before hiring a financial consultant covers the wider checks beyond remuneration.

Check the adviser before discussing fees

A competitive fee means little when the person is not authorised to provide the advice you need.

Use the Financial Advisers Register to check advisers who provide personal advice on investments, superannuation and life insurance.

The register can show:

Where the adviser has worked.
Qualifications and training.
Professional memberships.
The financial products they can advise on.

Confirm the name, business and authorisation before transferring money or sending identity documents.

Red flags in either payment model

Step back when a consultant:

Calls the service free without explaining commissions.
Refuses to express percentage fees in dollars.
Will not disclose product payments.
Pushes ongoing advice before defining the work.
Uses “fee-only” as proof that no conflict exists.
Claims to be independent without explaining why.
Recommends one product before learning about you.
Hides implementation and platform costs.
Pressures you to sign during the first meeting.
Cannot explain how to cancel the arrangement.
Charges for reviews that never occur.
Asks you to approve blank or incomplete fee forms.

Clear payment does not repair poor advice. Cheap advice can still be costly.

What to do when the fees do not match the agreement

Start with the adviser and ask for an itemised explanation.

Gather:

The Statement of Advice.
The Financial Services Guide or website disclosure information.
Fee consent forms.
Ongoing service agreements.
Product statements.
Super transaction records.
Insurance documents.
Emails describing the promised service.

Ask which service was delivered for each fee.

If the explanation does not resolve the issue, submit a written complaint through the advice business’s internal dispute-resolution process.

You can take an eligible unresolved financial complaint to the Australian Financial Complaints Authority. AFCA provides free dispute resolution for consumers and small businesses.

Moneysmart also sets out the steps in its guide to problems with a financial adviser.

The model that saves more is the one you can properly measure

Fee-only advice usually gives you a clearer view of the consultant’s payment. Fixed or hourly fees may be especially attractive when the advice is limited or the investment balance is large.

Commission advice may reduce the direct upfront cost, particularly for insurance. The commission still needs to be disclosed and considered alongside premiums, policy terms and any separate fees.

Do not choose on the label.

Convert percentages into dollars. Add product costs. Separate the first-year bill from the ongoing bill. Then write down what the consultant has promised to do.

From my experience comparing advice pricing, the most expensive mistake is rarely paying a fair price for useful work. It is paying year after year without knowing what the money buys.

The better model is the one that delivers suitable advice at a total cost you can see, question and cancel when the service no longer earns its place.