The rising popularity of robo-advice as a means of managing investment portfolios may threaten a "significant portion" of advisers' ongoing fees, an industry report has warned.
The Heath Report Three, published today (January 15), surveyed 249 adviser firms, representing 865 advisers, on the current availability and future of professional advice in the UK and extrapolated the results across the entire industry.
Respondents were also asked for financial information about their firms, with the results showing just over a third earned more than £250,000 a year in fees for ongoing service.
Mr Heath said: "This is significant in that should an increasing number of clients become interested in using robo-solutions to manage their own investment portfolios, having taken advice to set them up, a significant portion of the ongoing service fees could be at risk."
The report found 30 per cent of firms with just one adviser earned between £100,000 to £249,000 on average in annual ongoing service fees, with just 6 per cent of these firms earning less than £25,000 for the same charges.
Unsurprisingly the level of service fees grew for those firms with more advisers, with 71 per cent of businesses with between five to nine advisers earning £250,000 a year or more.
Mr Heath said it is not uncommon for firms to be earning as much, if not more, from fees for ongoing service than from the provision of advice.
He said: "While this is not surprising the point is the extent to which this level of ongoing service income is sustainable over the next five to 10 years."
When asked about their average annual advice fees, 66 per cent of firms consisting of one adviser earned less than £100,000 per year and 1 per cent earned between £500,000 - £749,000.
Of the medium sized firms with between five and nine advisers, 19 per cent earned more than £1m in advice fees per year and 25 per cent earned between £250,000 to £499,999.