A new survey has found that only 50 per cent of US investors, who fully rely on financial advice, would rather pay their advisers asset-based fees than retainers or commissions.
According to a report by US researcher Cerulli Associates, 49 per cent of investors within the adviser-directed segment would prefer their advisers be remunerated via an asset-based fee model.
Meanwhile, 24 per cent would rather pay a retainer fee and 21 per cent prefer their adviser receive a commission. Just 5 per cent were in favour of an hourly fee, the study shows.
“While critics of the industry’s move toward fee-based offerings bemoan the potential for limiting choice for investors from this perspective, it actually appears that clinging to commission-based models may result in mismatches with the preferences of a majority of adviser-reliant clients,” the report states.
The research also found that investors in the US have expressed a greater willingness to pay for advice about their investments.
“In 2008, 40 per cent of respondents indicated that they were interested in paying for advice. By 2016, the per cent grew to 50 per cent,” said Cerulli director Scott Smith.
“We have found a high correlation with investor wealth, and a less robust inverse correlation with investor age.
“Investors under age 40 express the greatest keenness to pay for financial advice.”
Mr Smith added that with the rapid growth of digital retailers, traditional wealth management providers must assess the vulnerability of their business models.
“Digital options have become part of the landscape but consumers facing complex decision processes repeatedly choose to include humans in their service selections,” he said.
The ifa Excellence Awards are back in 2021 and nominations are now open! This prestigious accolade recognises exceptional professionals within the financial advice industry, shining a light on the outstanding achievements from the nation's best and brightest. If this sounds like you or someone you know, then nominate today for the ifa Excellence Awards 2021!
The latest ASIC estimated industry funding levy proves that the current formula is “not equitable or sustainable” according to FPA. ...
An industry body says it is in favour of a change in government as the Coalition have “unfairly targeted” financial advisers. ...
The corporate regulator's cost recovery implementation statement for the 2021 financial year indicates the costs allocated by ASIC to the advice secto...