Business Development


But What do We Mean by Fee-based?

The shift among 401(k) advisors from a mainly commission- to a mainly feebased model continues at a brisk pace. Today, 41% of advisors say they are mainly fee-based, up from only 24% six years ago. Unsurprisingly, heavy advisors (those deriving 60% or more of their practice revenue from 401(k)) led the way; more recently light advisors (deriving less than 20% of their practice revenue from 401(k)) have climbed aboard the fee-based bandwagon as well.

Advisor Compensation Method


Is your practice mainly fee-based or mainly commissioned-based?

All of which begs the question of what advisors actually mean when they assert that they are fee-based. Skeptics (cynics?) among us have posited that advisors may be disclosing a fixed fee up front for specific services to be rendered, then selecting a loaded share class to deliver the agreed outcome. Example: my fees are $25,000 on your $5 million plan so 50 bps 12b-1 R shares will do nicely, thank you very much.

The data say otherwise. Fewer than one in five advisors (17%) say they most often use this approach, with heavy advisors somewhat less likely to do so (14%). For all advisors, a wrap fee on plan assets is by far the most common interpretation of “fee-based.” For heavy advisors, however, directly billing the plan sponsor is the vehicle of choice.

Fee Collection Preferance

Base: compensated mainly with fees

By 401(k) Share of Income

I'm going to read three ways you can collect your fees. Please tell me which one you rely on the most.

About the Research

These findings are based on telephone interviews with a representative crosssection of 628 advisors deriving income from 401(k) plans conducted in waves between June, 2010 and May, 2011.

About Brightwork Partners, LLC

Delivering both multi-client and custom studies, Brightwork is a research-based consulting firm with a special focus on investment, product and distribution issues in the retirement services industry; .

For more information: Merl W. Baker or Ronald L. Bush, 203.487.2000; ,







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