For financial advisors, the fee-based model remains the most popular structure, accounting for 72.4% of their compensation. By 2026, it is estimated that nearly 78% of the wealth management industry will operate under this model, representing an increase of more than five percentage points compared to 2024.
These figures come from the latest Cerulli Edge: The Americas Asset and Wealth Management Edition report. The shift toward fee-based services is primarily due to the transition from sales commissions to asset-based commissions in brokerage and distribution (B/D) channels, according to the latest report from the Boston-based global consulting firm.
In contrast, commission-based revenue has declined to just 23% of an advisor’s average earnings, and this trend is expected to continue in the coming years.
While many clients prefer commission-based pricing, advisors offer alternative structures to attract a broad range of clients across different investment asset levels, the report added.
In an interview with Funds Society in late January 2025, Aitor Jauregui, Head of Latin America at BlackRock, stated that this model was gaining traction in Latin America and the U.S. Offshore market, driven by technology.
“In the U.S. domestic market, the commission-based model accounts for 53% of managed assets; in Europe, 42%. In Latin America, it represents only 20%, but this percentage breaks down to 35% for U.S. Offshore and just around 12% for Latin America,” he noted.
According to Jauregui, the key takeaway is that “in a business growing at a double-digit rate, the fee-based segment is also expanding at a double-digit pace. In U.S. Offshore, this market has grown from 20% to the current 35%, and much of this transition from brokerage to the fee-based model can be attributed to the increasing role of model portfolios.”
“While asset-based fees are on the rise, they are not suitable for every situation,” said Andrew Blake, associate director at Cerulli. “Alternative fee structures, such as annual or hourly fees, can provide greater flexibility in customer service and a competitive advantage for firms operating under this business model,” he added.
Alternative fee structures and the ability for clients to receive a variety of planning services in one place set advisors apart and appeal to investors, according to the report.
More than one in five advisors (21%) reported charging for financial plans and deriving a portion of their income from associated fees, making this the most common non-traditional fee arrangement. On the other hand, only 3% of brokerage firm advisors reported earning income from financial plan fees, but this figure rises to 38% in the insurance B/D channel and 35% in the independent B/D channel.
As demand for comprehensive financial planning grows, Cerulli recommends that advisory firms take the time to determine how they want to charge clients for the various services they offer, beyond investment management.
“There is a gap between advisory firms that include financial planning in their fees and those that charge separately,” Blake stated. “Advisors need to be clear and concise about pricing structures and options for engaging with this clientele, who may require clarification on what an advisory relationship entails. Open and honest conversations about service costs will build trust and strengthen relationships between clients and advisors while attracting prospective clients willing to pay for financial advice,” he concluded.
