RJ and Makay

>> Read More RJ & Makay Blog Posts

A new report by Boston-based research firm Cerulli Associates indicates that investors prefer to pay commissions rather than fees for their financial advisory services.   Of the 7800 households surveyed, 47% said they prefer commissions as compared to 27% that would rather pay a fee based on assets under management. About 18% of survey recipients prefer negotiated lump-sum retainer fees, and 8 percent choose an hourly fee structure.

A recent survey of more than 500 registered investment advisors found that 73% of them had won more clients in the last six months, a 7% increase from a year earlier. Only 5% of RIAs reported fewer clients, compared to 8% last year. Clients opting out of traditional full-commission brokerages are providing most of their new business, continuing the trend of the past few years.

Maritz Inc. conducted the survey between March 21 and April 1, 2011 on behalf of TD Ameritrade Institutional, and included both TD Ameritrade custodial RIA’s and others.

When it comes to pricing, fee-based financial advisors simply aren't charging enough, suggest data from wealth management software firm PriceMetrix. The company drew this conclusion after analyzing 380 million transactions executed between 2007 and 2010 in 1 million fee-based accounts and 4 million transactional accounts.

“The most surprising thing to us was the wide range of prices charged for similar relationships on similar-sized fee-based accounts,” remarks PriceMetrix CEO Doug Trott. Fees progressively declined from an average of 1.17% on accounts ranging between $1 million and $2 million to 0.63% on accounts worth more than $5 million, Trott says. For accounts between $250,000 and $500,000, the lowest quartile of the advisors charged an average of 81 basis points while the highest quartile charged 208 basis points.