Costs transparency will eventually force advisers to lower what they can charge clients overall, to 1.5 per cent a year, according to Lang Cat principal Mark Polson.
Polson believes regulations such as Mifid II will steadily increase pressure on advisers and make it harder for them to justify fees above 1.5 per cent.
Speaking at an event this month run by Seven Investment Management, he argued the same constraint would also shape the charges asset managers could levy on consumers.
In his definition of price, Polson included the cost of portfolio transactions, the ongoing adviser charge and the wrapper the portfolio is held on.
He went on to explain the consequences for the wider industry of having more comprehensive information about charges.
He said: “We are constructing solutions where, if we [as an industry] could start again, we would not be doing what we are now.
Research the Lang Cat has done demonstrates there is no link between price and quality when it comes to charges.
“Many firms do not know what they’re charging clients. If a sustainable annual withdrawal rate is 3 per cent and your charge is 2.25 per cent on top of inflation, you will get into trouble.”