Could coronavirus change the way advisers charge clients?

Models under scrutiny

clock • 6 min read

Dramatic market dips resulting from the global pandemic have seen some advice firms' revenue streams take massive hits, putting pressure on the assets under management (AUM) model. And, like in any time of crisis, advisers are questioning whether their approach is best and some are exploring different possibilities. Claire Tyrrell spoke to several advisers about their charging structures and their view on fixed fees versus percentage-based models.

Capital Asset Management IFA and chief executive Alan Smith has operated his Chartered firm on a fixed fee basis for the past five and a half years after changing from a percentage of AUM model. Smith recently spoke to some advisers who were looking to make the same shift in light of current market conditions: "I think [change] was happening anyway. On one hand firms' revenue is really under pressure right now, and secondly they're stuck at home - I'm hoping people will have more time on their hands to reflect on their current business model." He points to the fact that many advisers ...

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