The cost of admin in a financial planning firm: a worked calculation
Admin rarely shows up as a line in the accounts, but it has a real cost. A worked calculation of hours times charge-out rate, using our time estimates, and a simple method for measuring your own firm.
On this page
- Why the cost of admin in a financial planning firm is hard to see
- The formula
- Charge-out rate
- Fully loaded cost
- A worked example using our time estimates
- Setting that against the cost of software
- Where the calculation can mislead
- The costs that do not show in the table
- How to measure your own firm
- Frequently asked questions
- Should I use charge-out rate or salary cost?
- Which admin job usually costs the most?
- Is the £150 rate realistic for my firm?
Admin never appears as a line in a planning firm's accounts. There is no invoice for the evening spent pulling figures out of platform valuations, or the afternoon lost to a file check. Yet the cost of admin in a financial planning firm is real, and it is usually larger than principals expect once someone sits down and works it out.
This article shows how to do that calculation. We walk through a worked example using our own time estimates, explain which rate to use, and set out a simple method for measuring your firm's figures rather than relying on ours.
Why the cost of admin in a financial planning firm is hard to see
Admin hides for three reasons. First, it is paid for in salary that has already been committed, so it never feels like new spending. Second, it is spread across many small tasks, none of which looks expensive on its own. Third, its biggest cost is an opportunity cost: the client meetings, new clients and better reviews that did not happen because the hours went elsewhere.
The research gives a sense of scale. In the NextWealth study for Fidelity of 209 advisers in 2025, advisers spent 20% of the day preparing reports and plans and 18% on compliance and admin, against 33% in client meetings. For illustration, on an eight-hour day, 38% is just over three hours. Advisers in the same study said their ideal would be 6% on admin.
The formula
The calculation is simple. For each recurring job:
Monthly cost = hours per item x items per month x hourly rate
The only real decision is which hourly rate to use, and there are two sensible choices.
Charge-out rate
Use this for adviser time. It answers the question "what could this hour have earned if it had been spent on client work?" It overstates the cash cost but captures the opportunity cost, which is what matters when an adviser is at capacity.
Fully loaded cost
Use this for paraplanner and administrator time. Take annual salary, add employer pension and National Insurance contributions and any other employment costs, then divide by the hours actually worked in a year. It tells you what the hour costs the firm in cash.
Whichever you choose, write it down and use it consistently. A calculation that changes its rate halfway through will not persuade anyone.
A worked example using our time estimates
The table below uses our estimates of the time each job takes by hand and with the relevant IFA Tools app, and the number of items a typical adviser handles each month. It applies a charge-out rate of £150 an hour, the illustrative rate our homepage calculator uses. These are our estimates; your own volumes and timings will differ.
| Job | Hours saved per item | Items per month | Hours saved per month | Value at £150 an hour |
|---|---|---|---|---|
| Write one annual review (3 hrs to 20 mins) | 2.5 | 5 | 12.5 | £1,875 |
| Review one compliance file (half a day to minutes) | 3.5 | 3 | 10.5 | £1,575 |
| Draft one client document (2 hrs to 15 mins) | 1.75 | 4 | 7 | £1,050 |
| Review one client meeting (1 hr to minutes) | 1 | 6 | 6 | £900 |
| Evidence one savings recommendation (3 hrs to 20 mins) | 2.5 | 1 | 2.5 | £375 |
| Assess one adviser competency (90 mins to minutes) | 1.25 | 1 | 1.25 | £187.50 |
| Total | 39.75 | £5,962.50 |
On these assumptions, the recoverable time is around forty hours per adviser per month, worth just under £6,000 a month at £150 an hour. Over twelve months that is £71,550 per adviser. For a firm of five advisers, multiply by five.
Setting that against the cost of software
The full suite of six apps is £299 per adviser per month, excluding VAT. As an illustration, at the £150 charge-out rate used above, the first two hours it saves each month are worth £300, which covers it. Individually, the largest single item in the table is the annual review: Strata is £89 per adviser per month, excluding VAT, against 12.5 hours saved by our estimate.
Where the calculation can mislead
Be honest about three things before you show this to a board or a business partner:
- Saved hours only have value if they are used. If the time goes into more client meetings, better reviews or a shorter working week, it is real. If it disappears into other admin, it is not.
- Volumes vary. An adviser with a small ongoing book will write fewer reviews; a compliance manager may check far more than three files a month.
- Review time remains. Every draft still needs reading and approving. Our "with the app" figures assume that, but your own checking habits will set the true number.
The costs that do not show in the table
Some of the most important costs of admin are not hours at all:
- Backlogs. When reviews fall behind, the firm risks charging for ongoing service it has not delivered. Our guide to clearing an annual review backlog covers this in detail.
- Sampling. When a file check takes half a day, firms check a sample. The files nobody opened are where risk sits.
- Templated documents. Rushed paperwork tends to be generic, which weakens the case for the value of the service.
- People. In the NextWealth study, 72% of advisers said reducing admin would improve their workday. Evenings spent on reports are a retention issue as well as a cost.
How to measure your own firm
Our estimates are a starting point. Your own figures are what should drive a decision. A simple four-week method:
- List the recurring jobs. Annual reviews, client documents after meetings, file checks, meeting write-ups, cash recommendations, competency assessments.
- Time a handful of each. Ask the people who do the work to record start and finish times for five examples of each job, including the checking.
- Count monthly volumes. Your back office system or review calendar will give you the number of reviews due; file checks and meetings come from your compliance and diary records.
- Choose and record your rates. Charge-out rate for advisers, fully loaded cost for support staff.
- Run the formula. Hours per item x items per month x rate, job by job.
- Test one change. Pick the most expensive job, change how it is done for a month, and time it again on the same basis.
Our article on how financial advisers spend their time includes a two-week time log you can use for step two.
Frequently asked questions
Should I use charge-out rate or salary cost?
Use the charge-out rate for adviser time, because the real cost is the client work that did not happen. Use fully loaded cost (salary plus employment costs, divided by hours worked) for paraplanners and administrators.
Which admin job usually costs the most?
By our estimates, annual review writing is the largest, at 12.5 hours per adviser per month that software can save, followed by compliance file checking at 10.5 hours. Your own figures depend on the size of your ongoing book.
Is the £150 rate realistic for my firm?
It is an illustrative figure used by our homepage calculator. Replace it with your own rate; the method works the same way at any rate.
The annual review is the biggest single item in most firms' admin bill. See how Strata turns platform valuations into a finished review, or book a twenty-minute demo with Adam Booth on Microsoft Teams, run live on a demo firm with nothing for you to prepare.
