(Bloomberg News) Investors would rather pay commissions for the financial advice they receive than a fee based on assets under management, said Cerulli Associates.

About 47 percent of 7,800 households surveyed prefer paying commissions, compared with 27 percent that would rather contribute a fee based on assets, according to the report released today by the Boston-based research firm. About 18 percent said they prefer paying retainer fees, which are generally lump sums negotiated between advisers and clients, and 8 percent said they opt for an hourly fee structure.

"Investors don't like the idea of paying a fee forever," said Scott Smith, associate director for Cerulli. "I think it rubs them the wrong way until the benefits are explained."

The financial advice industry has been moving towards a fee-based model in recent years, the report said. In 2010 about 66 percent of all providers of financial advice were compensated only or primarily by fees compared with 46 percent in 2003.

"If you're only going to trade five or seven times a year, it's probably more economical for you to pay a commission as opposed to paying someone one percent of your assets as a management fee," said Ira Hammerman, general counsel for the Securities Industry and Financial Markets Association, the lobbying group for the brokerage industry.

Free Advice

About 33 percent of investors surveyed said they didn't know how they pay for the investment advice they receive, and 31 percent said they thought their adviser or broker provided investment advice for free. Those who were unsure of how they pay for advice were most likely to be unhappy with their financial adviser, with 47 percent reporting dissatisfaction, the study said. About 27 percent of those who said they pay commissions reported being dissatisfied.

"Somebody who hands their adviser a check and hopes for the best is unlikely to have been very happy in the last few years," Smith said.

About 64 percent of those surveyed said they believe their financial adviser is held to a fiduciary standard of care, and 63 percent of clients of the largest broker-dealers said they thought that as well.

Brokers currently must meet a standard to offer clients "suitable investments," whereas registered investment advisers have a fiduciary obligation to put clients' best interests first.

Common Standard