How Nucleus Wealth fits into the financial advice landscape

How financial advice works

Personal financial advice is expensive. This is no secret. As with any important purchase, you should know how financial advice works. We offer limited personal financial advice at Nucleus Wealth but we don’t charge for advice. This means that the scope of the advice is limited to investment advice on Nucleus Wealth products. The advice is designed to help you find the best combination of Nucleus Wealth products for your circumstances. It can be applied to the extensive range of account structures we offer, including Individual, Personal Super, SMSF, Joint, Trust, and Company accounts.

How financial advice works elsewhere

The advice that can be given depends on what the relevant company is authorised to provide advice on. With most financial advisers there is no cost for an initial meeting and they will outline what they can do to help you. If you choose to proceed, there is always a cost involved. There are many types of models, but there are essentially two main ones and a hybrid of these:

  • Fixed fee for service, or
  • Percentage of funds under management.

Fixed Fee for Service

With this model, there is a fixed fee for the service offered. Under this model basic superannuation and insurance advice normally starts around $3,300, including GST. Personal advice can be as much as $10,000 + GST for setting up a self managed super fund, including holistic advice or more. It really depends on your circumstances, the complexity of your situation and the advice you need. Then there is the option for ongoing service to monitor the advice given and make changes as circumstances evolve. The ongoing service cost usually starts from around $2,200 + GST p.a. and increases with needs and complexity.

Percentage of Funds Under Management

Under this model, the client gets charged a percentage of funds under management for upfront advice and ongoing advice. This typically ranges from 0.5% p.a. to 2% p.a. After the initial advice there is then the option for ongoing service. The fee is usually between 0.5% p.a. to 1% p.a. This is on top of the underlying investment management fees.

Hybrid

In a typical hybrid scenario, you will pay a fixed fee for an initial piece of advice, then a percentage of funds under management fee for the financial adviser to continue to manage your finances in an ongoing service relationship. Note that the percentage of funds under management advice fee is on top of any investment management fees.

Things to note with how financial advice works

With each of these models, it only makes sense from a business perspective for the adviser to accept clients with investable assets of around half a million dollars due to the high regulatory and compliance costs of an advice business. Many advisers accept clients with lower amounts, but they often let these clients go when new clients come along with more assets. An adviser can only have an ongoing relationship with approximately 120 clients per year due to time constraints, and advisers naturally gravitate towards clients with higher levels of assets. It is just not profitable for advisers to accept clients with a low amount of investable assets, although these are often the people that need advice the most. This is especially true for the percentage of funds under management model.

Additionally, with a fixed fee-for-service model, there is more transparency in what you are getting for the fee paid. Whereas, with a percentage-based fee, this is less clear as the fee paid is dependent on how much you have to invest. With a percentage of funds under management fee for ongoing service, as your investment balance grows, the fee also increases. However, often there is no increase in the level of service provided. This is not the case with a fee-for-service model, as the fee is fixed regardless of the amount of investable assets you have.

How Nucleus Wealth is different

Nucleus Wealth is an online digital adviser with real people behind it.

We use scale and technology to eliminate any financial advice fees. We do charge an investment management fee but that is for managing your investments and all investment managers charge this fee. All our advice is provided online, where you can access your investments through our portal, and you can see more in-depth performance and reporting via our platform partners also.

You have access to a financial adviser like myself at any stage of your investment journey with Nucleus Wealth. What often happens is that potential clients have an initial meeting before deciding to come on board. Then they go through the no-obligation onboarding portal, and if needed, they have another meeting to make sure they understand the risks, potential returns and intricacies of the selected or recommended investment. Most information can be found on our FAQ page and Too Much Information page. However, if you still have questions, we are always here to answer them.

If you want to have a portfolio review, we offer that at no cost. If you want to discuss your current investment and the consequences of changing strategies, for example, we do that also. If you want to discuss the strategies available to you at your stage of life, we can have a general conversation about that too.

We try to create as much value as we can and educate clients on their investment journey through our weekly Nucleus Investment Insights podcastNucleus Wealth Empower video series and our regular articles. By providing you with this general information, we are endeavouring to empower you to make better financial decisions and fill that void of an adviser without the cost. An example is our regular articles and videos on how to take advantage of the many tax-saving opportunities within super. This is what a traditional financial adviser would do. The only difference is we do not charge several thousand dollars a year for this, and they would usually implement this advice for you.

More information on how we give advice

There are essentially three ways we choose the right investment for you: self-directed, limited advice and full advice. Each of these is explained below.

  1. If you know exactly what portfolio or combination of portfolios you want to invest in, then the self-directed pathway is the one to choose.
  2. If you want us to recommend a portfolio for you, then the limited advice pathway is the one to choose.
  3. If you need help with other aspects of your personal finances, we can still make a recommendation for a Nucleus Wealth investment, but we will also refer you to a third-party external financial adviser. We do not receive referral fees or commissions for this. We just try to use good people that are excellent at what they do so we can help you can get the best outcome for your situation.

Feel free to book a call with me here for a no-cost, no-obligation conversation.

P.S. the figures given here for the cost of advice is general in nature and not indicative of all advice practices. Some will charge more, and some will charge less. This is just a general guideline. Although financial advice may seem expensive, there is real value in the advice given. In most cases, you get what you pay for, and most advised clients are very happy with the service, value and peace of mind provided.