Advisors Who Aggressively Transition to Fee-based Business See Better Results According to New PriceMetrix Insights Report

Higher Assets, More Revenue and Better Return on Assets

August 15, 2012, Toronto, ON  – Financial advisors who aggressively move a significant portion of their assets under management into fee-based accounts quickly benefit from an increase in assets, a higher return on assets and ultimately greater revenues, according to a new report from PriceMetrix, the first choice for practice intelligence solutions for retail brokerages in North America. The report found that the advisors moving business into fee accounts most aggressively have seen revenue growth of 47 percent over the last three years compared to an average growth rate of 21 percent.

“Our report demonstrates the pace at which advisors choose to transition to fee-based accounts has a meaningful impact on their results, not only in terms of assets and revenue growth but also with respect to the quality of the advisor’s book of business.” commented Doug Trott, President and CEO of PriceMetrix.

The new report also confirms that the retail brokerage industry is shifting from traditional, commission-based business towards a higher proportion of fee-based business. In just the last three years, the percentage of industry assets in fee-based accounts has grown from 21 to 28 percent. Ninety-one percent of all advisors now have at least one fee account in their book of business.

At the same time, however, few advisors have completely abandoned the transactional side of the business. Only one percent of advisors have 90 percent or more of their client assets solely in fee accounts.

So-called hybrid households, in which a household has at least one fee-based account and one transactional account, are also growing quickly and are up 41 percent since 2009.

“Although advisors often think of themselves as either ‘fee-based’ or ‘transactional’, the reality is that most advisors are a little of both,” said Doug Trott. “While the trend towards fee-based business is clear, as the market matures, both clients and firms are demanding that advisors offer a variety of products and services to satisfy a wide range of client objectives.”

PriceMetrix bases this report on its aggregated retail brokerage data representing 3.2 million investors, 500 million transactions, 1 million fee-based accounts, 4 million transactional accounts, and over $900 billion in investment assets. All results are reported as of May 2012.

In its report, PriceMetrix found fee-based accounts are more attractive for advisors almost across the board. The average fee-based account is 46 percent larger than the average transactional account. It also generates more than three times as much revenue, an average $2,900 per fee-based account compared to $870 for a transactional-based one. Households with at least one fee-based account generate a return on assets that is 40 to 70 basis points higher than households that are purely transactional.

Interestingly, both the age of the client and the advisor appear to play a role in the degree of interest in fee-based accounts. Clients between the ages of 40 and 64 have exhibited the greatest propensity to use fee based accounts. At the same time, however, less experienced advisors seem to be much more eager to embrace fee-based business than more senior advisors. The majority of advisors with less than ten years experience have at least 25 percent of their assets in fee-based accounts, while two-thirds of advisors with more than 20 years of experience have less than 25 percent of their assets on the fee side.

“We also found much of the increase in fee-based assets has come from new relationships, with two thirds of new fee-based accounts opened in new client-advisor relationships,” commented Doug Trott. “The remaining one third of new fee-based accounts was opened with existing clients.”

PriceMetrix’ report clearly shows advisors who most aggressively moved more of their books into fee-based business outperformed their counterparts. Advisors who increased their fee-based ratio of business by at least 25 percent over the last three years improved the quality of their household mix (the proportion of clients above a certain asset size), their return on assets, and transformed their revenue stream to be more than two thirds recurring. The average advisor in this group saw a 49 percent increase in assets under management and a 41 percent increase in recurring revenue. These advisors also almost doubled the percentage of households in their books generating $5,000 or more in annual revenue (Figure 1), while significantly reducing the number of households generating less than $500 (Figure 2).

Core Household Ratio 2009-2012 Graph

“An aggressive shift in an advisor’s business model is an excellent opportunity to assess their client base and align clients with the type of service model they intend to provide.” noted Doug Trott.

About PriceMetrix

PriceMetrix is the first choice in practice intelligence solutions for retail brokerages in North America. We help wealth management firms enhance revenue growth, by enabling advisors to identify and action otherwise lost revenue opportunities. By combining industry know-how with powerful aggregated market data, we help our clients increase overall firm profitability.

PriceMetrix directly measures aggregated data representing 3.2 million investors, 500 million transactions, 1 million fee-based accounts, 4 million transactional accounts and over $900 billion in investment assets. PriceMetrix combines its patented process for collecting and classifying data with proprietary measures of revenue, assets, and households to create the most insightful and granular retail wealth management database available today.

Founded in 2000 and headquartered in Toronto, Ontario, we service a notable range of retail wealth management firms within the United States and Canada. To learn more about PriceMetrix, please visit or call and email us at 1-866-955-0514 and 

Media Contacts

Patrick Kennedy
Chief Customer Officer
PriceMetrix Inc.
416-955-0514 ext 227