While a growing share of affluent investors say they prefer fee-based financial advice, many still opt for other compensation models, according to new research from Cerulli Associates.
Cerulli’s analysis draws on data from its Affluent Investor Tracker, which surveys investors with at least $250,000 in financial assets, providing insights into how compensation preferences vary by provider type and client segment.
In its second-quarter US Retail Investor Edition research report, Cerulli found that 36 percent of affluent investors favor fee-based compensation. However, the study also shows that 33 percent of respondents actually pay their provider via an asset-based fee. A sizable number still use no-fee platforms (21 percent) or commission-based structures (20 percent), only slightly trailing those who express a preference for those options.
“These differences between preferred compensation and actual compensation speak to the sprawling nature of primary providers in terms of the services they offer and the different types of clients they attract,” John McKenna, research analyst at Cerulli, said in a statement Wednesday.
“Self-directed platforms and commission-based payments are more likely to attract independent-minded investors who may have a substantial amount of assets with their providers, while more outsource-minded investors may prefer a fee-based financial advice relationship,” McKenna said.
Over the past decade, many financial services firms have transitioned away from commissions toward asset-linked fees. Cerulli attributes this shift to firms' growing emphasis on fiduciary responsibility, with compensation structures tied to portfolio performance rather than the volume of sales linked to specific investment products.
Even so, the persistence of commission and no-fee models highlights ongoing client demand for flexibility, particularly among those who are early in their wealth-building journey or remain wary of traditional advice relationships.
Among affluent investors, fee-based compensation was most popular with clients of Raymond James (cited by 56% of those with Raymond James as their primary firm), Ameriprise (51%), Morgan Stanley (46%), LPL Financial (46%), and Edward Jones (43%).
In contrast, clients of Vanguard (49%), TIAA (43%), USAA (37%), E*TRADE (33%), Fidelity (32%), and Charles Schwab (31%) showed stronger preferences for no-fee, self-directed platforms.
Emphasizing the wisdom of diversification, Cerulli said offering a variety of pricing models can serve as a gateway for firms to cultivate deeper relationships. The research points to a potential client life cycle starting with transactional or no-cost services, then going into full-service, advised relationships over time.
“Although asset-based fee arrangements have created a greater sense of alignment between advisor and client incentives, firms should be careful not to be limited to just one engagement option, lest they leave scores of potential clients unserved,” McKenna said. “Offering flexibility in compensation structures is key to accommodating evolving client preferences.”
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