In Australia, fee-only financial advisers charge you directly for their time or a set fee, while commission-based advisers are paid (in part or fully) by the product providers whose offerings they recommend. Understanding which model suits your situation is one of the most important steps you can take before engaging a financial planner in 2026.
What "fee-only" and "commission-based" actually mean in an Australian context
The terms sound straightforward, but the Australian regulatory landscape adds important nuance. Under the Corporations Act 2001, financial advisers must act in their clients' best interests and comply with the best interests duty introduced through the FOFA (Future of Financial Advice) reforms. Those reforms significantly restricted conflicted remuneration, though certain carve-outs still exist for general insurance and some other product categories.
A fee-only adviser charges you directly. That fee might be hourly, a flat project fee, a retainer, or, in some cases, an agreed percentage of assets under management. Critically, they do not receive payments from product providers for placing you in particular investments, insurance policies, or platforms.
A commission-based adviser earns some or all of their income from third-party product providers. Since the FOFA reforms, ongoing trailing commissions on most investment and superannuation products are banned, but upfront and ongoing commissions are still permitted on risk insurance products such as life cover and income protection. This means commission arrangements are still alive in parts of the advice market, and it is worth understanding exactly how any adviser you consider is remunerated.
For an overview of how advice fees and commissions work in practice, ASIC MoneySmart is the clearest starting point for Australian consumers.
How Australian regulations shape adviser remuneration
Australia's advice sector has undergone significant reform over the past decade. The FOFA reforms banned trailing commissions on new investment and superannuation business, and the professional standards framework that came into effect in subsequent years raised education and ethics requirements for all registered advisers.
As of 2026, all practising financial advisers must be registered on the ASIC Financial Advisers Register. This register lets you verify an adviser's licence, qualifications, the licensee they operate under, and any disciplinary history. Checking this register before engaging anyone is a non-negotiable first step.
The regulations do not prohibit commission-based remuneration outright. What they do require is transparency: advisers must disclose all remuneration arrangements in a Financial Services Guide (FSG) and a Statement of Advice (SOA). If an adviser is reluctant to explain precisely how they are paid, that is a significant red flag.
The practical differences for your wallet and your advice
The fee structure an adviser uses affects more than just the invoice you receive. It also shapes the advice you are likely to get.
With a fee-only adviser, the incentive is (in theory) aligned with giving you advice that genuinely serves your goals, because their income does not change based on the products you end up holding. If they recommend a low-cost index fund or suggest you stay in your existing superannuation fund rather than switching, there is no financial penalty to them for doing so.
With a commission-based adviser, particularly one who receives insurance commissions, there is a structural tension. That does not mean the advice will be poor, but it does mean you should ask pointed questions: "Are you receiving any payment from the insurer or product provider if I take out this policy or buy this product?" A good adviser will welcome the question and answer it clearly.
There is also a practical access question. For consumers who cannot afford large upfront fees, a commission-based adviser for insurance cover may be the only accessible option. The cost of advice is a genuine barrier for many Australians, and the sector continues to grapple with this. See our cost guide for a qualitative breakdown of what different advice models may mean for your budget.
How to compare advisers: what to look for beyond the fee model
The fee model is important but it is not the only thing worth examining. When comparing advisers, consider the following:
- Qualifications and registration. Check the ASIC Financial Advisers Register to confirm their credentials and that they hold a current Australian Financial Services Licence (AFSL) or are an authorised representative of a licensee. - Areas of specialisation. Some advisers focus on superannuation and retirement planning, others on investment portfolios, and others on personal insurance. Make sure their expertise matches your needs. - Ongoing versus one-off advice. Some fee structures are better suited to ongoing relationships; others work well for a single review or a specific financial event such as receiving an inheritance or approaching retirement. - Transparency of documentation. A reputable adviser will provide a clear FSG before giving advice, and a detailed SOA setting out their recommendations and rationale afterwards. - Complaints history. The ASIC Financial Advisers Register includes information about any banning orders or significant disciplinary actions.
If you are looking for practitioners in your city, our best financial planners in Sydney page is a useful starting point, and you can review how we assess and select listings on our methodology page.
Questions to ask a prospective adviser before you commit
Before signing an engagement letter, ask every adviser you meet the following questions directly:
1. Are you a fee-only adviser, or do you receive commissions or other payments from product providers? 2. Can I see your Financial Services Guide before we proceed? 3. What are all the fees I will pay, and how are they calculated? 4. What is the process if I want to make a complaint about your advice? 5. Are you a member of any professional association, and are you subject to a code of ethics beyond the statutory requirements?
Asking these questions is not confrontational. A competent, ethical adviser will be straightforward in their answers.
Superannuation advice: a special consideration
Superannuation is a common reason Australians seek financial advice, and the rules around superannuation advice and fees have their own layer of complexity. The Australian Taxation Office publishes guidance on what advice fees can be deducted from a superannuation account, and this is an area where the fee structure of your adviser can interact directly with your fund balance.
Some advisers charge a fee that is deducted from your superannuation account, which is permitted in certain circumstances. Others charge outside of super. Understanding which arrangement applies to you, and whether the deduction is appropriate, is worth clarifying with both your adviser and your superannuation fund.
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FAQ
Q: Is it illegal for a financial adviser in Australia to receive commissions? A: No. Commissions on most investment and superannuation products were banned under the FOFA reforms, but commissions on risk insurance products such as life cover and income protection remain permitted. All remuneration arrangements must be disclosed to you in writing. Q: How do I check that an adviser is legitimately registered? A: Search their name on the ASIC Financial Advisers Register. This is a free, publicly searchable database that confirms current registration, licensing details, qualifications, and any disciplinary history. Q: Can I get financial advice for free? A: Some superannuation funds offer limited, intra-fund advice to members at no additional charge, covering topics directly related to their account. For comprehensive personal advice, there is generally a cost involved, either paid directly by you or built into product commissions. ASIC MoneySmart at moneysmart.gov.au has guidance on lower-cost advice options. Q: Does fee-only advice always produce better outcomes than commission-based advice? A: No outcome guarantee can be made for any advice model. A fee-only structure removes certain conflicts of interest, but the quality of advice also depends on the adviser's expertise, experience, and the care they take with your individual situation. Always verify credentials, read the Statement of Advice carefully, and seek a second opinion if you are uncertain.---
Sources
- ASIC MoneySmart -- financial advice overview - ASIC Financial Advisers Register - Australian Taxation Office -- super for individuals and families - APRA -- superannuation oversight - Corporations Act 2001 (Cth)
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Information in this article is general only and not personal financial advice. Verify the details with the linked sources or an appropriately qualified Australian professional before relying on them.
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