Financial advisers are losing an average of $20,000 in fees for not pricing their fee-based businesses competitively enough, according to a survey from the software firm PriceMetrix Inc.
The study determined that assets in fee-based accounts made up almost 25% of total assets under administration and about 37% of total revenue.
The results were released March 29.
The area is also growing, with the average adviser's assets in fee-based accounts increasing 24% from 2007 to 2010, PriceMetrix said.
Despite that growth, advisers are now earning less from those fee-based accounts.
The average return on assets for those accounts fell to 1.32% last year, from 1.47% in 2007.
The low return on assets comes as individual advisers discount the fees they charge, the survey found, mostly at 72% to 79% of scheduled prices.
At the same time, advisers are giving the same size discounts to large and small accounts.
Advisers are finding the most opportunity to charge more with new accounts, the survey discovered, while only 5% of advisers raised their prices on existing accounts by more than 10 basis points over a three-year time frame.
PriceMetrix's survey also determined that there were discrepancies in fees between adviser groups.
The top 25% of advisers charged average fees of about 2% and the bottom 25% charged an average of 0.81%.
"When sharing this information with advisers, we get challenged with the assertion that the higher-priced advisers must be losing business to lower-priced advisers," Doug Trott, PriceMetrix's president and chief executive, said in a press release.
"We have found little evidence of this, however, and instead find that clients are willing to pay for a strong value proposition," Trott said.
PriceMetrix, of Toronto, provides software for North American retail wealth management professionals.
The information used in the research comes from the company's database, PriceMetrix said, which consists of about 15,000 adviser books, 2.3 million investors and 1 million fee-based accounts.
