Half of 3,000 people polled would prefer to pay a fixed fee for standard pieces of advice work such as setting up a pension and one in four would like to pay commission.
Drewberry’s wealth and protection survey of 3,000 full-time, part-time and self-employed Britons showed almost five years since the Retail Distribution Review introduced customer agreed remuneration simple commission is still more popular than hourly fees and four times more popular than percentage of asset-based fees.
Almost a quarter (24 per cent) of those polled want the return of traditional commission as a way of paying for financial advice.
Just 6 per cent of Britons prefer percentage-based charging.
Only a fifth (21 per cent) prefer hourly adviser fees and just 6 per cent like the idea of percentage of asset-based arrangements, which is currently used by the majority of advisers.
Two-thirds (65 per cent) of Britons polled said they have never received financial advice.
However, of those who had received financial advice, 63 per cent thought they were better off financially as a result of the advice they received.
Tom Conner, director of Drewberry, said: “This shows that we still have some way to go as an industry to get the idea of fee-based advice across to the man in the street.
"Our results suggest that, by and large, Britons tend to lean toward the options that are easiest to understand.
“Just over half of Britons like the idea of ‘set fees’ for ‘standard’ pieces of work, for example, but many advisers have struggled to price their services in this way as there’s no such thing as a ‘standard’ client which makes fee calculation more complex.
“This also explains why, almost five years on from the introduction of fee-based advice, nearly a quarter of Britons say they would still be willing to pay traditional commission.
"To many, it is still an easy to understand, painless, option. Despite its shameful track record, concerns as to commission bias haven’t really penetrated the ‘zeitgeist’.
“Only 21 per cent of our respondents said they’d prefer to pay an hourly rate which, for many adviser business models, is the most efficient and transparent way to price their services.
"This underlines the continuing gulf between how Britons see the value of professional financial advisers compared to other professional advisers such as lawyers and accountants who often charge hourly fees.
“Only 6 per cent of respondents said they were happy to pay a percentage-based fee on the level of assets involved even though this has become the prevailing model for most financial advisers in recent years.
"This method is often easier for advisers as it’s relatively quick and simple to calculate what the fees would be, it just doesn’t appear to be very popular with the public.
Dennis Hall, managing director, of London’s Yellowtail Financial Planning, says: “This research chimes with my own experiences and the discussions I have with clients about fees.
"Fixed fees are attractive, but it is only half the story. The sticking point comes when you start telling clients how much the fixed fee will be.
"We’ve not been very good at showing people where the real value of advice sits. It is often perceived to be at the point a product is sold, which possibly explains why a return to commission would be attractive for some.
"We are at the beginning of the end for percentage-based fees, over the next decade I predict a big shift from the assets under management (AUM) model, with advisers overseeing investments for a fixed fee regardless of the portfolio size.”
But Alan Lakey, director of Highclere Financial Services in Hemel Hempstead, said: “The majority of consumers do not care whether the payment is fee or commission.
"To most, it is the same thing and they prefer it to be sourced from the investment as opposed to an explicit payment from their net income.
“The Retail Distribution Review experiment hasn’t worked inasmuch as most advisers work in a similar manner as before because their clients desire it.
“Contrast this with solicitors and accountants where fees are charged but consumers only use them when they believe it absolutely necessary.”
Anna Sofat, founder of London-based Addidi Wealth, agreed that very few clients wish to pay fees for protection plans.
She said: “The key for the consumer is to have a variety of fee of options from different advisers, but with an easy to compare model, so the consumer can compare and decide what’s best for them. The issue to date has been how to make the comparison easy to understand.”
Drewberry's findings come after last month a member of the Financial Conduct Authority's Financial Advice Working Group admitted most consumers are still under the impression financial advisers are paid by commission.
Nicky McCabe, head of investment trusts at Fidelity International and chairman of the working group’s advice and guidance sub-committee, made the comments while setting out the findings of the group’s consumer research.
The Financial Advice Working Group was set up by the Financial Conduct Authority to take forward some of the recommendations from the Financial Advice Market Review, which was tasked with tackling the advice gap that was widened by the Retail Distribution Review.
Ms McCabe said the group had carried out consumer research to find out people’s attitudes towards financial advice and guidance.
She said: “People’s knowledge of the consequences of the Retail Distribution Review was not well known.
“A lot of people still felt the advisers were getting some form of commission and it impacted their view of what they were recommended.
“That perception still has not changed.”
stephanie.hawthorne@ft.com
