Hourly Rate vs Percentage Adviser Fees

Two advisers can do almost identical work and charge you wildly different amounts, not because one is greedy, but because of how the fee is structured. The percentage-of-assets model and the hourly rate are the two dominant ways UK advisers price their time, and the gap between them widens dramatically as your wealth grows. Understanding both is the single most useful thing you can do to avoid overpaying.

This guide sets the two models side by side: how each works, what they typically cost in 2026, a worked comparison that shows where the crossover lies, and how to judge which suits your situation. Fees were made transparent by the rules governing how advisers are paid, so the numbers are there to be compared: the skill is in reading them. This is information, not personal advice, and investment values can fall as well as rise.

The two dominant models

A percentage fee, often called an ad valorem charge, from the Latin for “according to value”, is set as a proportion of the money the adviser is looking after. An hourly rate does exactly what it says: you pay for the time spent, like a solicitor or an accountant. Both are entirely legitimate, and both have to be disclosed to you in pounds before you commit. Where they differ is in what drives the bill: with a percentage, it is the size of your pot; with an hourly rate, it is the complexity of the job.

That difference is the whole story. For a straightforward task on a large sum, a percentage can charge you for wealth rather than work. For a complex task on a small sum, an hourly rate can do the same in reverse. Neither is a trap and neither is a bargain, they simply reward different circumstances, which is why the comparison always has to be run on your own numbers. A useful habit is to ask any adviser to quote the same job both ways where they can; the gap tells you a great deal.

How percentage fees work

The percentage model usually appears in two places: an initial charge for setting up and implementing a plan, commonly around 1%–3% of the sum invested, and an ongoing charge for managing it, typically 0.5%–1% a year. On a £250,000 pension, a 1% ongoing fee is £2,500 a year, every year: a figure that is easy to underestimate when it is quietly deducted rather than invoiced. Our overview of what a financial adviser costs sets these ranges out in full.

Crucially, reputable firms tier the percentage, because running £1 million does not cost twice as much as running £500,000. A tiered schedule might charge 1% on the first £250,000, 0.75% on the next £250,000 and 0.5% above £500,000, so the effective rate falls as the pot grows. A flat percentage applied to a large portfolio, with no tapering, is worth challenging: it is the arrangement most likely to leave you overpaying. Always ask for the effective rate once tiering is applied, and the pounds it produces on your actual balance.

How hourly fees work

With an hourly rate you pay for the adviser’s time and expertise directly, usually somewhere between £150 and £300 an hour in 2026, with senior planners and specialist work at the upper end. A defined project, reviewing whether to consolidate your pensions, say, or arranging retirement income, might take a handful of hours to research, model and write up. The great virtue is that the bill reflects the work, not your wealth: the same job costs the same whether your portfolio is £100,000 or £1 million.

The trade-off is uncertainty. Time can run over, and a genuinely complex situation, trusts, multiple pensions, business assets, can rack up hours quickly. Good hourly-charging firms manage this by giving you an estimate up front and agreeing a cap, so the open-ended feeling is contained. Ask what happens if the work exceeds the estimate, and get the answer in writing. Hourly billing also rewards you for being organised: the more complete the information you bring, the fewer hours you pay for.

Hourly charging is also the model where it is easiest to see exactly what you are buying. Because each hour is itemised, you can look at the invoice and understand where the time went, research, meetings, report-writing, implementation. That transparency is a genuine advantage for people who want to feel in control of the spend, and it is one reason hourly and fixed fees are common among advisers who lean towards one-off, project-based work rather than long-term management. It is far rarer to be surprised by an hourly bill than by the cumulative weight of a percentage taken quietly year after year.

The fixed-fee alternative

A close cousin of the hourly rate is the fixed fee, where the adviser quotes a single price for a defined piece of work, perhaps £2,000 to build a retirement income plan, or £1,500 to review an existing portfolio. It removes the uncertainty of hourly billing entirely: you know the price before you start, whatever hours it takes. Fixed fees have grown steadily more popular precisely because they answer the question consumers most want answered, “what will this actually cost me?”, with a single number.

Fixed fees work best where the task is clearly bounded. Ask for a fixed quote whenever the job is well defined, and treat any reluctance to give one as a signal that the scope is vaguer than it should be. For confident investors who want a plan rather than a permanent manager, a one-off fixed fee can be the whole relationship, which is exactly the choice we explore in our answer on whether you need an adviser or can do it yourself.

A worked comparison

Numbers make the point better than prose. Imagine the same one-off task, setting up a retirement income plan that takes roughly ten hours of work, priced both ways, across three portfolio sizes. Assume a 1% initial percentage fee against a £250-an-hour rate.

The pattern is clear: below roughly a quarter of a million pounds the percentage tends to win on this kind of one-off job, and above it the hourly or fixed fee pulls ahead, often dramatically. The crossover shifts with the number of hours and the rates involved, but the principle holds. The larger your pot, the more you should scrutinise any percentage, and the more an hourly or fixed quote is worth requesting for comparison. It is entirely reasonable to ask an adviser to justify a percentage fee that comes out far above what the same work would cost by the hour.

Which suits you

This is also where the question of whether you need ongoing help at all comes in. If you want a plan you can run yourself, a fixed or hourly fee for the plan alone may be all you need. If you want someone to hold the tiller through market storms and life changes, an ongoing percentage might earn its keep. We weigh that broader judgement in our answer to whether a financial adviser is worth it, and every adviser in our vetted network will quote you clearly whichever model you prefer.

It is also worth remembering that the two models are not fixed for life. As your circumstances change, so can the fee that suits you. A younger investor with a modest, growing pot may be well served by a simple percentage; the same person twenty years later, with a substantial portfolio and a settled plan, might be far better off switching to periodic fixed-fee reviews. Reviewing not just your investments but the basis on which you pay for advice is a healthy habit, and a good adviser will not flinch from that conversation, because a fair fee is the foundation of a relationship built to last.

Watching the total cost

Whichever model you choose, the adviser’s fee is only one layer of what you pay. Sitting beneath it are the platform charge and the fund charges, costs that apply regardless of how your adviser is priced. It is entirely possible to negotiate a keen adviser fee and still pay too much overall because the underlying products are expensive, so always ask for your total cost of ownership: adviser fee, platform fee and fund charges added together. Since MiFID II, your provider must send you an annual statement showing all of it in pounds, the clearest single view of what you really pay.

The discipline, then, is twofold. First, choose the fee model that best fits the size of your pot and the job at hand. Second, look past the adviser’s slice to the whole cost stack. Get both right and you keep more of your own money working for you, which, over the decades of a pension or an investment portfolio, is one of the few outcomes genuinely within your control.

Common questions on fees & costs