Will Financial Advisors Have to Change their Fee Structures?

Many in the broad financial advice industry expect fees advisors charge to clients for managing money and performing a variety of services to change in the next decade. But no one knows with any certainty where the potential variations in prices are heading.

Clients will continue to demand more in services from their financial advisors, resulting in a shift in pricing. That’s the financial advice industry’s broad consensus on pricing and fees at the moment.

The traditional fee by an advisor, to charge a client a percentage of assets to manage their portfolio and money, known in the industry as an asset-based fee, “is going by the wayside,” said Tammy Robbins, executive vice president, chief business development officer, Cambridge Investment Research.

Asset-based fees may be a portion of an advisor’s fee in the future, she said.

“It’s not going to be your traditional asset management” fee, Robbins said Tuesday morning in Dallas at the annual meeting of the Financial Services Institute, a trade association for independent broker-dealers. “It is going to be very different, so we have to be open-minded in how financial professionals are consultative, and how they are a concierge type of service.”

Robbins spoke on a panel titled “How low will they go? Navigating price pressures.”

The fee advisors and firms in the future charge clients “may not be a percentage of assets,” Robbins said. “Personally, I don’t think it will be. It will be more like an a la carte menu of services, including financial planning, taxes, guidance on buying a car or home. We’re going to have to be open-minded.”