A significant change in investor preferences towards alternative fee structures in financial advisory services is shaping the industry, as reported on Monday. This shift from the traditional assets under management (AUM) model reflects a growing demand for more flexible and potentially more transparent fee arrangements.
Wealthramp, a platform that connects consumers with advisors, has observed this trend among its users. In 2023, 42% of over 2,000 users chose alternative fee structures rather than selecting ‘no preference’ or adhering to the conventional AUM model. This indicates a clear preference towards non-traditional fee models.
Moreover, since 2020, there has been a noticeable surge in the number of clients seeking flat or hourly fee arrangements. Among those who hired an advisor via Wealthramp, 61% requested these alternative pricing structures instead of the percentage-based AUM model.
The evolving investor behavior highlights a changing landscape in the financial advisory sector, with an increasing number of consumers favoring alternatives to the traditional AUM model. The impact of this trend on future pricing strategies within the industry remains to be seen.
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