How are your fees calculated?

The basis of the fee decides everything else: how much you pay, whether it rises with the claim, and who carries the risk if the claim changes. A proposal that names a percentage without saying what it applies to, or a fixed fee without saying what it covers, cannot be compared with any other. The fee types section explains each model on the same illustrative claim.

The adviser health check asks you: "Could you work out your fee from your engagement letter alone?" If the answer is no, this is the question to ask first.

A plain description in writing: the model, the amount it applies to, any cap or minimum, when each part is due, and what is extra. A worked example on your own figures, so you can see the fee at the claim size you expect and at half that size. An adviser who is comfortable with the question will answer it without being asked twice.

A percentage with no stated base. A fee that changes basis depending on the outcome. An answer that refers you to standard terms rather than the letter in front of you. Extras that are mentioned but not priced. None of these means anything is wrong, and all of them mean you do not yet know what you will pay.

• The clause: fee basis
• The script: asking how the fee is calculated
• Red flag: unclear fee base. Green flag: a fee you can work out yourself
• Adviser health check and the fee comparison calculator