The cost of advice continues to rapidly increase due to rising regulatory costs, according to research from fintech Padua Solutions.

Data compiled into the ‘Padua Advice Fee Data Report’ for FY22 shows initial advice fees charged by advisers on a per-advice-document basis increased 16 per cent, from $2,859 in FY21 to $3,315 in the past financial year.

Ongoing advice fees saw an even larger increase of 33 per cent from $3,656 in FY21 to $4,865 in FY22.

Padua Solutions co-CEO and co-founder Anne-Marie Esler said data like this showed why cost is frequently cited as the main reason Australians aren’t seeking advice.

“Especially when advice fees can rise by more than double the current rate of inflation,” Esler said in a media release on Friday morning.

The report used the advice data from the approximately 5 per cent of the financial advice market that use Padua’s software and services.

Esler noted the rise of fees has been due to the regulatory burden on financial advisers which has required them to devote more time making sure advice documentation adheres to compliance standards.

She added the industry losing 12,000 advisers since 2019 has heaped further pressure on the sector.

“The mass exodus of advisers from the financial advice industry has only exacerbated existing concerns around the cost and accessibility of advice,” Esler said.

The firm noted the impact the Quality of Advice Review could have in reducing the cost of advice if the proposals from the review are passed.

“If we as an industry don’t work towards reducing the cost of providing advice, it will become increasingly inaccessible for most people, and especially those who would potentially stand to benefit most from financial advice,” Esler said.

But at what cost?

Although only a fraction of the industry, Padua’s fee data provides a snapshot to compare against the cost of advice.

Proposals from the Financial Services Council a year ago found the average cost of advice was $5,334 which the association said could be reduced to $3,400 pending recommendations it suggested for the industry.