Australians are increasingly hearing the phrase ‘fee for service’ — but what does it actually mean, and why does it matter for your money in 2025? With financial advice, legal services, and even some medical providers moving towards this model, understanding the ins and outs can help you make smarter decisions and avoid hidden costs.
What is Fee for Service?
Fee for service is a payment structure where you pay directly for the advice or service provided, rather than being charged a commission or percentage-based fee. In financial advice, this means your adviser is paid for the time and expertise they provide — not from products they recommend or sell.
- Transparency: You know exactly what you’re paying for and why.
- No hidden incentives: Advisers have less reason to recommend products that pay them more.
- Customisation: You can often choose the specific services you need, and pay only for those.
Why Is Fee for Service Gaining Traction in 2025?
Several factors have propelled fee for service models into the spotlight across Australia’s finance sector:
- Regulatory reforms: The Financial Sector Reform (Advice and Product Design and Distribution) Act 2025 has further tightened rules around conflicted remuneration, making commissions on super and investment advice less common.
- Consumer demand for transparency: Australians are more financially savvy than ever, demanding clear value and honest pricing from professionals.
- Royal Commission legacy: After the Hayne Royal Commission, major banks and advice firms have moved to fee for service to rebuild trust and comply with stricter regulations.
For example, many superannuation funds now offer access to fee-for-service advice on specific issues, such as retirement planning or insurance, charging a flat or hourly rate rather than bundling costs into ongoing management fees.
Real-World Examples and What to Watch For
Let’s look at how this plays out in practice:
- Financial advisers: Instead of an annual percentage fee (e.g., 1% of your portfolio), you might pay $300 per hour for advice, or $2,000 for a comprehensive plan. Ongoing service packages are often available as fixed-fee subscriptions.
- Mortgage brokers: Some are experimenting with fee for service, charging a flat rate for loan advice rather than collecting commissions from lenders. This is still rare, but expected to grow as the sector adapts to regulatory pressure.
- Accountants and legal professionals: Many have long used fee for service, charging by the hour or per task (e.g., $250 for tax return preparation).
In 2025, ASIC and the Australian Financial Complaints Authority (AFCA) are actively monitoring compliance. Advisers must provide a clear Statement of Advice outlining all costs. New guidelines also require explicit consent for ongoing fee arrangements, with renewal every 12 months.
Benefits and Drawbacks for Australian Consumers
Is fee for service always better? Here’s what to consider:
- Pros:
- Greater transparency and control over costs
- Reduced risk of conflicted advice
- Ability to shop around for only the services you need
- Cons:
- Potential for higher upfront costs, especially for complex advice
- Less accessibility for those unable to pay up-front
- Some services may not be as comprehensive if you pick and choose
Realistically, fee for service works best for Australians who want to be actively involved in their financial decisions and are willing to pay for quality, unbiased advice.
How to Make the Most of Fee for Service
- Always request a written quote and breakdown of costs before proceeding.
- Ask about the scope of service – what’s included, and what isn’t?
- Check your adviser’s credentials on the ASIC Financial Adviser Register.
- Compare offerings and don’t hesitate to negotiate on price or ask for a package deal.
With the right approach, fee for service can empower you to get high-quality advice tailored to your situation, without paying more than you need to.
