Almost a quarter of UK advisers who charge £100 or less for their services face a 40% drop in income from 1 January next year as rules outlawing the payment of commissions to advisers come into force, research suggests.
Some 23.5% of advisers in this bracket derive an average of 41.7% of their income from initial commissions on saving and investment products.
The same group only receive 30% of their income from fees.
The study by research group CoreData was based on responses from 1,126 financial advisers.
Advisers who charge more than £200 per hour will be better off as they source 56.3% of their income from fees and just 24.8% from initial commissions, according to findings published in the Adviser Fees and Business Models report.
The 40% of advisers who charge between £101 and £150 per hour will face a potential 36% shortfall from providing savings and investment advice.
Angele Spiteri Paris, senior consultant at CoreData Research says: "In an environment of banned initial commissions these advisers could try to either raise their pricing for delivering client advice to make up the shortfall or seek more clients to maintain income levels.
"Additionally, or as a distinct alternative, we could see advisers increasing their provision of certain insurance products to clients to generate replacement income streams."
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