Advisors who move aggressively into fee-based business end up doing much better than their transaction-based colleagues, with more assets, a higher return on those assets and more revenues, according to a new report.

Advisors who moved clients into fee accounts most aggressively grew revenue 47% over the last three years, compared with an average growth rate of 21% for the industry, according to the new Insights report from PriceMetrix, the research consultancy.

It's no wonder they're in a rush.

Fee-based accounts are more desirable for advisors on several fronts. The average fee-based account is 46% bigger than the average transactional account, according to the report. It also generates more than three times as much revenue, which works out to an average $2,900 per fee-based account compared with $870 for a transactional account. Clients with at least one fee-based account create a return on assets 40 to 70 basis points higher than transactional households.

The bottom line: the faster advisors shift their business into fee-based business, the better.

Those who boosted their fee-based ratio of business by at least 25% over three years saw more clients with greater assets and better return on assets. They also saw their stream of recurring revenue stream beef up to be more than two-thirds of their practice.

The average advisor in this category realized a 49% jump in assets under management and a 41% leap in recurring revenue. They also almost doubled the percentage of households in their books generating $5,000 or more in annual revenue. They also cut back the number of households creating less than that.

That last piece - pruning away the less profitable clients - is key. "You'd expect increase in ROA and recurring revenue," said Patrick Kennedy, coauthor of the study. "But when you look at the change in client mix after an advisor has done a deliberate transition to fee-based, the results are quite striking compared to those who are drifting [towards fee-based]. That's what's producing the results of the advisors who are moving more aggressively towards fee."

He added that the trend goes both ways. Clients are increasingly holding both types of accounts, rather than simply accepting the way they do business with their advisor as their advisor's choice.

The number of "hybrid households," which hold at least one fee-based account and one transactional account have leapt 41% in the last three years, according to the report. "The important message to advisors is listen to your clients, to what the market is telling you," he said. "You can't force clients who might be interested in paying that way to change the way they do business with you. It's encouraging to me to see clients choose both - that gives me evidence advisors are starting to listen to clients and understand what their preferences are."

The study found another thing for advisors to consider. Age can influence the decision to go with a fee or transactional account, for both broker and client. Clients between the ages of 40 and 64 have shown greater willingness to use fee-based accounts.

But on the advisor side, more junior practitioners are making the switch more easily than their senior colleagues. The majority of advisors with less than a decade on the job have at least a quarter of their assets in fee-based accounts. Compare that with the two-thirds of advisors with more than two decades of experience: they have less a quarter of their assets in fee-based accounts.

The report also measured how quickly the brokerage industry overall is making the shift to fee-based business. Over the three years ended in May, industry assets in fee-based accounts have grown to 28%, up from 21%. Now nearly all advisors - 91% - have at least one fee-based account in their practice. However, the report also shows that few advisors have made the leap from traditional brokerage entirely. Just 1% of advisors have 90% or more of their assets in fee-based accounts.

The report had several tips for advisors on how to shift their practice into more fee-based business. Beyond being able to explain both types of accounts to clients, as well as service them, it suggests learning to spot opportunities to open both types of accounts for a client. It reminds advisors that clients under 40 and over 65 may not be as enthusiastic about fee-based accounts. The report also suggests that advisors review their client roster with an eye to pruning away less profitable clients.

The report is based on aggregated retail brokerage data representing 3.2 million investors, 500 million transactions, 1 million fee-based accounts, 4 million transactional accounts, and more than $900 billion in investment assets.

Elizabeth Wine writes for On Wall Street.