Over 40% of adviser firms have reviewed their charging structures in the last six months. And nearly all adviser firms have taken a long hard look at their approach to adviser charging in the last two years, according to our adviser survey for the latest Platforum report – Adviser Market: Charging Models.
MiFID II has prodded advisers into reflecting on the way they explain to clients how much they are paying and what for. Appointed reps in particular were under pressure from their compliance teams to review charging models.
Many of the firms reviewing charges have decided to make no changes. Of those who have, regulatory change is often blamed.
In fact, over half the advisers we surveyed increased their charges, either for all their clients or at least for their lower value clients, who tend to be less profitable. When advisers analyse how much time they spend on individual clients and what they need to charge to cover their costs, it often turns out that they are making losses on lower value investors.
MiFID ll is leading advisers to take a closer look at the basic economics of their businesses. They need to cover their costs but they also have to focus on clients and services where they can provide real value.