Fee-based advisors are changing the shrinking financial advisor landscape.

As financial advisor ranks contract, advisors who earn at least 75% of their total compensation from asset-based fees have elbowed their way in, and now comprise four in 10 financial advisors, according to a study released Monday by Market Strategies International.

Advisor Brandscape, a Cogent Reports study, found that fees and expenses offer firms the greatest potential to enhance loyalty among users who are mainly fee-based—even as consistent fund performance and a distinctive firm investment policy remain critical.

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The report was based on an online survey with 1,460 financial advisors conducted in the first quarter of this year. In order to qualify, respondents had to have an active book of business of at least $5 million and offer investment advice or planning services to individual investors on a fee or transactional basis.

Predominantly fee-based advisors include not only RIAs, but also national wirehouse advisors and independent planners, according to Meredith Lloyd Rice, a Market Strategies vice president and the report’s author.

“Firms overlook this group of advisors at their peril,” Rice said in a statement. “We’ve heard from many advisors who feel the [Department of Labor] fiduciary ruling is pushing them toward a fee-based compensation structure.”

She said mutual fund managers who want to secure and strengthen relationships with these high-end producers must convey consistent, long-term investment performance and value for the money.

Active mutual fund managers can also emphasize their firm’s distinctive investment philosophy and strong performance in asset classes, with the highest growth potential including U.S. equities, non-U.S. equities, U.S. fixed income and emerging markets.

“During this period of industry disruption, strengthening advisor loyalty is more critical than ever,” Linda York, senior vice president at Market Strategies, said in the statement.

“We see many advisors consolidating the number of asset managers they work with, along with home offices beginning to limit the number of investment managers on the platform. Firms that have built the strongest levels of advisor loyalty are much less likely to be dropped.”

Following are the top 10 mutual fund companies that have earned the strongest loyalty among the expanding fee-based market, according to the report:

Franklin Templeton sign at its headquarters.

10. Franklin Templeton

9. Legg Mason

Larry Fink, CEO of BlackRock.

8. BlackRock

7. MFS Investment Management

Jamie Dimon, CEO of JPMorgan Chase. (Photo: AP)

6. J.P. Morgan Funds

5. American Funds

Jeffery Gundlach, CEO of DoubleLine Funds.

4. DoubleLine

3. T. Rowe Price Eugene Fama, founder of DFA. (Photo: Jim Tweedie)

2. Vanguard

1. DFA (Dimensional)

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