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For several years, I have been paying my full-service adviser a commission of 1 per cent on all buy and sell transactions instead of an asset-based fee. He suggested this, because my portfolio consists largely of dividend stocks and has low turnover. "Why would you pay a fee to hold stocks you don't plan on trading?" he said at the time.

Now, he has realized he is not making any money off me and wants to charge a flat annual fee of 1 per cent on the portfolio of about $1-million. He said he tried to negotiate it down with his superiors but they said 1 per cent is the minimum. I have a separate discount brokerage account, and the research I get from my full-service broker helps me make decisions in that account, but most of the "stars" were my decision and the "dogs" were his.

Any suggestions?

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Your adviser could be feeling the heat to generate more income for his firm, or he could simply be trying to put more money in his pocket. Either way, there should be some room to negotiate, but you should have a plan B in case you can't reach an agreement.

"I think the client is being treated very, very unfairly," said Garth Rustand, executive director of the Vancouver-based Investors-Aid Co-operative of Canada.

With more investors managing their own money, advisers are scrambling for whatever assets they can find, he says. So it's unlikely that the adviser will dig in his heels and refuse to manage an account of that size. Mr. Rustand suggests the client tell the adviser that 1 per cent – or about $10,000 – is too high for a low-turnover account, and then make a counteroffer of, say, 0.5 per cent.

If the adviser still refuses, the client must be prepared to walk away.

"I think the adviser will back down," he says. "If not, then for this guy who isn't doing a lot of trading, I honestly think he's probably better off taking all of his money to a discount broker. He can put the trades through on his own and his costs will go way down."

John DeGoey, vice-president with Burgeonvest Bick Securities in Toronto, also believes that 1 per cent is too high for a $1-million account, but 0.5 per cent is "far too low." With his own clients, he charges a sliding fee scale of 1.4 per cent on the first $250,000 and 0.6 per cent on amounts over that. For a $1-million account, that works out to 0.8 per cent, or $8,000.

That said, Mr. DeGoey says he understands the adviser's position. If the adviser gives one client a break, he would have to offer the same deal to other clients with similar accounts or try to keep it a secret. "You have to set a fee schedule that you believe is defensible and maintain it so as to not show favouritism," he says.

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Derek Moran, president of Smarter Financial Planning in Kelowna, B.C., wonders whether the client needs an adviser at all.

"It sounds to me like he does not, but doesn't realize it," Mr. Moran says.

If the client is not comfortable cutting ties, he could try a "hybrid solution" where he would transfer to the discount brokerage account the holdings he has no intention of selling, and leave the rest for the adviser to manage. That would reduce the size of the full-service account, and the dollar amount of the 1-per-cent fee would also go down.

Another option is to consider moving his money to a portfolio manager, who would charge a flat fee but have discretion over the account (unlike an adviser who makes recommendations that must be approved by the client). Most portfolio managers charge about 1 to 1.5 per cent, but "with large amounts, the fees can be well under 1 per cent," Mr. Moran says.

Shifting his account to a portfolio manager, many of whom have the respected chartered financial analyst designation, could also make sense if the client is at an advanced age.

"He should decide who should manage the portfolio in the event he, and the spouse if there is one, are not alive or of sound mind. To me that is a more important question to ask," he says.

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