10th August 2015

Advisory firms make big leap to fees, FundsNetwork research reveals

With less than nine months to go until the April 2016 sunset deadline, advisory firms have made significant steps forward in moving their clients to fees, FundsNetwork research* reveals. According to the survey, over half of firms (52%) now have 75% or more of their revenue that is facilitated via platforms, coming from fees.

The research also revealed that 1 in 6 firms (17%) have already moved all of the clients they intended to move to fee arrangements already. Also encouraging was that 56% of those surveyed expect to move all the clients they ultimately intend to move to fees before the end of the year rather than wait until the deadline, which 19% intend to do.

With significant progress being made to take control and move clients to fees, it is apparent that trail commission is playing an increasingly smaller part in advisory firms’ revenue.  

Indeed, the research identified that two thirds (66%) of firms now have less than half of their revenue coming from trail commission, and of which 57% have less than quarter of their firm’s revenue coming from trail commission. Just over a third (34%) of the firms surveyed indicated that they have more than half their revenue currently made up of trail commission.

Looking at the support that advisers receive from platforms around the sunset changes, the surveyed revealed that 83% of advisers feel well supported by their platforms when it comes to helping them to move clients from  bundled to unbundled assets and subsequently set them up on fee arrangements that must now be put in place.

FundsNetwork will be converting any remaining bundled assets on the platform to clean share classes from November 2015 to meet its regulatory obligations, ahead of the deadline.

Jon Everill, Head of Advisory Services at FundsNetwork, comments: “As we edge ever closer to the deadline for the sunset changes it’s extremely encouraging to see that such significant strides have been taken by firms to engage with clients and agree fee arrangements where previously trail commission existed.  

“At FundsNetwork, we will of course continue to support firms throughout the sunset changes but with only few months to go, we would also like to urge firms to continue making the necessary preparations ahead of deadline.”

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