Forty Percent of Advisers Are Now Fee-Based

Among this set of advisers, fees are the biggest factor driving loyalty.

Forty percent of advisers are fee based, according to Advisor Brandscape, a Cogent Reports study released by Market Strategies International. While consistency of fund performance and having a distinctive investment philosophy are important to registered investment advisers, fees and expenses are the No. 1 reason why they select an adviser from among those who are fee-based.

“Firms overlook this group of advisers at their peril,” says Meredith Lloyd Rice, a vice president at Market Strategies and author of the report. “We’ve heard from many advisers who feel the DOL [Department of Labor] fiduciary rule is pushing them toward a fee-based compensation structure. For mutual fund managers seeking to secure and strengthen relationships with these high-end producers, highlighting consistent, long-term investment performance and value for the money is even more important to covey.”

Among fee-based advisers, the top 10 mutual funds that earn their trust the most, in descending order, are: DFA, Vanguard, T. Rowe Price, DoubleLine, American Funds, JP Morgan Funds, MFS Investment Mangaement, BlackRock, Legg Mason and Franklin Templeton.

The Cogent report is based on an online survey of 1,460 advisers conducted between January and March of this year.