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You know the subscription model that Netflix and Spotify are using with such great success? The investment advice biz has been using it for ages.

It’s called fee-based advice, and it’s slowly taking over the industry. I just heard from a reader who is bugged by this trend. “Could you please recommend companies that will provide investment advice and are compensated on a per-transaction basis rather than a percentage of my portfolio? Every organization that we approach will only be compensated on a percentage of the proposal.”

Short answer: No. The number of advisers who are compensated for their work through commissions on trades of stocks and other securities is declining, and no firms that I know of work on this model.

Fee-based advice accounted for about two-thirds of revenues at North American financial advisory firms in 2017, according to the PriceMetrix unit of consulting giant McKinsey & Co. These fees range from roughly 1 per cent for large accounts approaching seven figures to between 1.5 per cent and 2 per cent for smaller accounts. They’re typically paid on a quarterly or monthly basis, with the money coming from your investment account in most cases. It’s quite a bit like having your monthly Netflix fee charged automatically to your credit card.

Fee-based accounts are supposed to align the interests of advisers and clients. Advisers have no incentive to recommend products with lucrative fees or encourage excessive trading in order to generate trading commissions. Paid through a reliable advice fee, advisers are able to simply advise.

The downside for clients is that the advice fee covers advisory services that (a) may not actually be delivered by the adviser or (b) may not be desired by the client. If all you want in an adviser is someone you can bounce ideas about stock trades off of and have them execute those trades, then a fee-based account would be a worse value than having an adviser paid on a per-transaction basis.

People who want to pay an adviser on a per-trade basis should try calling some local investment dealers to see if anyone in the office is willing to offer this kind of service. Dealers are keen for the fee-based model for obvious reasons – clients are turned into revenue streams. However, there are still some rebel advisers who charge by the trade.

One more thought is to forget advice altogether and open an online brokerage account. Commissions are roughly $10 flat per trade, and that’s about it for fees if you have an account of any size.

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