Advisors continue marching toward a fee-based business model. According to a March report by Cerulli, the number of fee-based advisors rose to 52% in 2010. Fee-based advisors far outnumber advisors using other revenue models. Twenty-two percent of advisors have a mix of fees and commissions and 14% are fee-only. Just 11% of advisors are commission-only.
The resistance to fee-based practices, Cerulli found, is from investors. Many investors, according to the report, indicate that they prefer to pay "discrete commissions;" however, in these cases, investors assume their advisor is acting as a fiduciary.
Scott Smith, associate director at Cerulli Associates, noted three talking points on the benefits to advisors who use a fee-based model. First, he told AdvisorOne, is that operating under a fee-based model brings advisors under a fiduciary standard.