Asset-based fees – what would advisers do without them?
New research has confirmed the continuing centrality of asset-based fees for financial advisers, particularly with respect to mid-tier clients.
The research, to be presented to today's Money Management Future of Wealth Management Conference in Sydney reveals the challenges advisers will face if they are forced to totally abandon asset-based fees and adopt an hourly fee model.
The research, conducted through August, shows that while advisers have comfortably reached hourly and sometimes yearly fee models with their high net worth clients, asset-based fees are the preferred method with respect to mid-tier or low balance clients.
The survey showed that an annual fee was the dominant choice with respect to high net worth clients, with around 60% of respondents choosing this method, while asset-based fees dominated with respect to clients who were described as “medium-value” or “low-value”.
Importantly, the survey revealed that hourly fees appeared to be the least favoured option for advisers across all client types, albeit that around 12% of advisers used hourly fees when dealing with low value clients.
The Money Management research has also revealed that advisers expect to be servicing fewer but high value clients in the post-Royal Commission environment.
The future of asset-based fees remain under a cloud with the Royal Commissioner, Kenneth Hayne, suggesting that they appeared to have been an attempt to replicate the revenue stream that flowed from a combination of upfront and trailing commissions.
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
