Most financial advisers do not understand all of the charges levied by fund providers, Alan Miller, founder of SCM Private said.
Miller claimed the heads of research within the largest advisory firms are unaware a fund's total expense ratio (TER) excludes dealing costs.
The comments come as part of SCM's report, Promoting Trust and Transparency in the UK Investment Industry.
The report is part of the True and Fair campaign, launched by SCM in January, which aims to improve transparency in fund provider charging.
"Anecdotal evidence gathered by the authors of this report found that even the heads of research within some of the largest advisory firms did not know that the TER does not include dealing costs," the report said.
The report also drew on recent research from accounting network BDO, claiming that the retail distribution review (RDR) will not improve the transparency of the service consumers receive from advisers.
"Advisers would simply be charging ‘commission by another name'," the SCM report quoted from BDO's research.
SCM proposed in its report that introducing a standardised form to display charges for all funds would help advisers and clients understand the costs of investing.
"The entire savings and investment management industry, including advisers, has to look at its moral compass as technology and the internet along with a lack of trust will empower individuals to self-invest to the detriment of the industry," the report said.
Partner Insight: James Bateman, chief investment officer for Multi Asset at Fidelity International, argues investors need to ensure they are protected against negative market movements following February's pull-back.
Leading losses in the NASDAQ
Fight ‘familiarity bias’
Our weekly heads-up for advisers