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What is a fair and reasonable supervision fee?

Under Clause 12 of the Code, a supervisor must ensure that any fees charged are fair and reasonable in the circumstances.

Supervisors who breach this requirement are at risk of a complaint being made to the Authority.

As with other fees charged, supervision fees need to be justifiable. 
Many new advisers wonder whether supervision fees should be charged on a percentage or at an hourly rate. There is no right or wrong answer to that question and both approaches are taken.

Supervision agreements should be very clear on what supervision fees will be charged:

  • If the supervision fee is an hourly rate, it should be clear whether that will be applied to formal meetings only or emails and phone calls also.
  • If the supervision fee is a percentage of the client’s fee, it should be clear what standard client fees will be.
  • If there are to be no fees charged, this must be clearly stated.

Here are some examples of considerations that may be taken into account when setting a supervision fee, or assessing whether one is fair and reasonable:

  • How much time the supervisor will spend on supervision. This will depend on a number of factors including the provisional licence holder’s caseload, level of experience and competence, as well the frequency of supervision agreed.
  • What level of fees the provisional licence holder will charge (20% of $200 is significantly less than 20% of $1000). It is important that a supervision arrangement is sustainable for both parties. The prospective provisional licence holder should be clear on what their budget is.
  • The level of experience of the supervisor.
  • Whether the supervisor or the provisional licence holder will be generating the clients.
  • The quality and value of the supervision. As with the Graduate Diploma, supervision is an investment in a new adviser’s career and/or business. Many advisers talk about past supervision as an extremely helpful and rewarding experience.

The code of conduct toolkit has more information.

boxout tip Note

That not all supervisors charge for supervision on the basis that they want to give back to the profession; it is not a requirement to charge.

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