The survey of 102 intermediaries carried out during April found that 42% expect total advisory fees to fall over the next five years, 32% think they will rise and 24% believe they will stay the same.
Opinion is similarly divided on fees charged by DFMs. Of those asked 53% predicted that DFMs will cut their charges while 45% think they will increase or stay the same.
A big factor behind this confused picture is the rise of model portfolios, with 71% of advisers expecting demand for them to increase or stay the same, but they are seemingly unsure on the overall impact this will have on fees.
There is something approaching a consensus in one regard, with 74% of advisers sayings they consider bespoke DFM’s are ‘justified’ in charging higher fees than those applied to model portfolios.
The survey also identified increasing pessimism on future investment returns with only 3% expecting it to get easier to generate returns, 37% expecting it to remain the same and 51% believing it is going to get harder.
“Advisers are divided on what will happen to all types of fees but when it comes to investment markets, they are far more united in their belief that conditions will either remain similar or become even more difficult,” said Mark Stevens, head of intermediary services at Investec Wealth & Investment.
“In this environment, advisers recognise the additional value offered by bespoke DFMs and appreciate that this level of service is likely to cost more,” Stevens added. “However, given the continued strong demand for bespoke DFMs from investors, it’s clear that many clients have no qualms about paying for a quality investment management service and professional advice.”
