Despite the advisor industry’s more than decades-long shift toward fee-based or fee-only compensation models with an eye toward fiduciary standards, 23% of affluent investors still prefer to pay advisors per transaction on a commission basis, according to a new report and survey by Cerulli Associates.
Cerulli found a mix of fee preferences in a survey pool of 6,000 U.S.-based investors, with fee-based leading the pack at 36%. That was followed by 25% who said they preferred self-directed investment platforms, 23% for commission-based, one-off charges, 13% prefer to pay a retainer fee and 1% like an hourly fee.
“In general, we have noticed that the preference for commission-based payment has fallen over the last decade since we first posed this question, so there is a strong potential for that preference to further give way to asset-based fee payments for more advised clients and those who are pursuing more financial advice,” Cerulli Research Analyst John McKenna Advisors said via email.
However, McKenna and team also found that nearly one-quarter of investors see the once-dominant model of one-time, commission-based fees as better for their situation.
“Those with more limited advice engagements will likely not find much value in asset-based fees, especially for one-time or limited services for specific products or plans,” he said. “Commissions can also be popular with those who have limited assets but high incomes—especially younger investors—who may find it challenging to find an advisor that charges based on assets but might want greater flexibility in terms of how they can compensate an advisor for particular services needed at a given stage in their life.”
Cerulli surveyed investors with more than $250,000 in financial assets and those under 45 who earn more than $125,000 annually.
In separate research Cerulli did this year with financial advisors, the shift toward asset-based services is more evident, and commission-based fee structures are at a lower percentage than the 23% among the investor pool.
In a survey of advisors not among the principal owners, 77.6% estimate they will offer asset-based fees in 2026, an increase from 72.4% using that fee model in 2024.
That compares to 16.6% of advisors who say they will offer commission-based fees in 2026, down from 22.8% who offered them in 2024.
Fees for financial plans should also rise to 2.5% in 2026 from 1.7% in 2024, and monthly or ongoing subscription fees see a slight uptick to 0.6% from 0.3%. Other types of costs, such as annual retainer fees (1.7%), hourly fees (0.7%), and different types (0.4%), will remain flat.
Robert Jeter, financial advisor and founder of Back Bay Financial Planning & Investments in Salisbury, Md., embraced fee-based advice after working in a commission environment for three years.
“I view fee-based as the most transparent and aligned way that we work with clients,” he said, noting that when he started in the business, his salary was based on commissions, and he would find himself in “uncomfortable spots making sales to clients.”
Jeter said the Regulation Best Interest rule, which the Securities and Exchange Commission started implementing in 2020, should keep a fiduciary standard on financial advice. But in reality, “the dynamic of making a sale or food on the table doesn’t disappear.”
“In my opinion, the commission-based dynamic shouldn’t exist in the room in the first place when it comes to being a true profession and rendering financial advice,” he said. “The entire reason we have two standards of care is because the conflict is so massive. Would anyone purchase an investment if that conflict was truly disclosed? … In my experience, most people would immediately get a second opinion.”
Cerulli found that clients working with bank-based advisors, wirehouses and some independent broker/dealers tended to prefer one-time, commission-based transactions. Whereas investors interested in no-fee, self-directed platforms were found in greater percentages with providers such as Vanguard, Fidelity and Charles Schwab.
These findings match the advisor universe. Eighty-four percent of independent RIAs estimate they will provide asset-based free structures in 2026, which is the same percentage as wirehouses. However, commission-based fees are much lower, with just 3% of independent RIAs and 15% of wirehouses planning to offer them.
Even among independent RIAs, the movement toward fee-only planning or hourly rates was just 2%, with monthly subscriptions at 1%.
Avanti Shetye, a fee-only, advice-only financial planner and founder of Wealthwyzr based in Ellicott City, Md., argued that the widespread use of “fee-based” planning can confuse clients as it mixes fees for service with commissions from product sales.
She said commission-based advice is not necessarily bad if the recommended products are in the client’s best interest. However, even well-meaning advisors can have a subconscious bias toward recommending products that pay them more.
“The financial industry (similar to the medical industry) thrives from a lack of transparency and conflicts of interest,” she said.
She advocates for fee-only financial planning, with 100% of compensation from client fees, whether flat-fee, hourly or AUM-based.
“Fee-only planning minimizes conflicts of interest and keeps the advisor’s loyalty where it belongs—with the client,” she said.
Whatever the fee structure, Cerulli found that 64% of surveyed investors are satisfied with their advisor relationship. Another 34% are satisfied but open to a new partner, potentially rife for poaching, and just 2% are unhappy but will stay put anyway.
Advisor Jeter, who offers fee-based, hourly and flat fee (with no investment advice) options, noted that no fee model is perfect. Even a flat fee service, he said, can incentivize an advisor to limit time or service to maximize profitability.
“Everyone has conflicts,” he said. “I believe some are far more manageable and easily discussed with a client. That said, financial planning is about helping clients meet outcomes down the road. The biggest part of that is the growth of their resources. Not only that, but as resources grow, so does complexity, decisions, goals, etc. Fee-based compensation naturally reflects and remains appropriate for both parties.”
#Investors #Prefer #CommissionBased #Fees #Industry #Shift