“The industry has far more work to do to highlight the value of advice in an environment in which upfront fees have replaced the old commission model,” he said.
Citing the group’s Global Investment Survey 2015 – which found the cost of advice can range from £75 an hour to £250 an hour – he said affluent investors were unwilling to pay the higher charges.
According to the report, the average wealthy investor is willing to pay a maximum of £110 an hour for financial advice.
Mr Gent said: “The survey suggests there is a significant mismatch between what advisers charge for their services and what investors are willing to pay.”
An Unbiased survey of its listed advisers showed a 14 per cent decrease in the average hourly rate from £175 an hour in 2013 to £150 an hour in 2014.
Garry Heath, editor of the Heath Report and IFA champion, said: “It is for advisers to prove their value to clients but it is a commercial market and they need to be properly compensated. They need to look at how much is going into regulatory costs also, which is around 20 per cent, and be aware of how much an adviser actually gets.”
The Legg Mason survey also found that use of financial advice by wealthy investors was less prevalent in the UK (35 per cent) than the US (55 per cent).
Mr Heath said: “The US does not have private banking and stockbrokers as accessible as we do so they are more likely to go to an adviser, and the US pensions system requires people to seek advice. There also are not enough advisers in the UK.”
In another survey finding, 48 per cent said the key reasons for using an adviser was to help improve investment performance, and avoiding costly mistakes was significant for 46 per cent, while gaining access to investments they would not otherwise have access to was why 44 per cent said they would consult an adviser.
“It is surprising there is a lack of desire among UK investors for a formal financial plan, but perhaps less of a shock that clients use advisers to help them avoid making mistakes when choosing their investments,” Mr Gent said.