Fee-Based Accounts and Advisory Models

Chapter 25 examines how advisory relationships can be structured around ongoing fees rather than per-trade commissions. It compares managed and non-managed fee-based accounts and explains when a given account model is more or less appropriate.

This chapter is about alignment and trade-offs. The exam often tests whether a fee arrangement matches the client’s activity level, complexity, service need, and preference for discretion or self-direction.

Exam Focus

• Distinguish fee-based pricing from commission pricing by incentive structure, disclosure burden, and client effect.
• Compare managed accounts with non-managed fee-based arrangements by discretion, customization, and oversight.
• Evaluate account structure through client behaviour, service level, and cost reasonableness rather than marketing labels.

In this section

• Fee-Based Account Overview
  Fee-based accounts in Canada, including how they differ from commission-based accounts, when they fit, and the main cost, conflict, and suitability issues.
• Managed Fee-Based Accounts
  Managed fee-based accounts, including discretionary management, wrap programs, SMAs, UMAs, robo-advisory models, and current supervisory expectations.
• Non-Managed Fee-Based Accounts
  Non-managed fee-based accounts, including advisor-guided but client-directed relationships, cost trade-offs, and the distinction from managed and order-execution-only accounts.