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FA Center: Why more financial advisers may become like Costco — subscription-based

Back in the good old days, financial advisers earned a living by charging clients commissions on the sale of investments and insurance. Then, over time, financial advisers earned a living by charging clients a fee based on the assets they managed, typically 1%.

And that trend continues. For instance, InvestmentNews recently reported that the biggest broker-dealers in the U.S. are steadily moving client assets from accounts compensated by commissions to fee accounts. Commissions as a proportion of total revenue fell from 70.7% in 2011 to 57.7% last year, while fee revenue rose from 24.5% to 33.9%, according to data from an InvestmentNews survey of independent broker-dealers.

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