Research by Fitz Partners has found average investment advisory fees have increased over the past three years, eating into asset managers' margins.
According to the report Investment Advisory Fee Benchmarking, average investment advisory fees, which cover asset allocation and stock selection, are 41bps. This is up from 35bps three years ago.
Meanwhile, the average gross management fee (including distribution fees) has decreased from 1.06% to 1.02%.
At the same time, the share of the management fee which was covered by investment advisory fees has increased by 22% over three years.
This means any remaining revenue or margin received by fund houses from management fees, after any investment advisory and distribution fees, has shrunk as a result.
Hugues Gillibert, chief executive of Fitz Partners, said firms were paying increasing attention to their fee levels.
"Internal discussions in fund houses are becoming more focused. Fee benchmarking is not only a question of overall level of funds costs for investors, it is also about good business practice and margin preservation.
"Whether it is for transfer pricing purposes when advisory services are delivered outside the funds' domicile or for benchmarking sub-advisors fees or internal advisory teams' costs for profitability purposes, a close monitoring of these bundled fees has become essential."
He added: "As asset managers are watching their margins ever more closely, it has become essential to benchmark all components of funds' management fees.
"It is remarkable to see that for many European asset managers, the part of management fees paid for investment advisory services has increased substantially and has been eating into asset managers' margins."
Fitz Partners' research is based on asset managers' confidential fee schedules and aims to show the true cost of investment advisory fees paid to entities providing advisory services to the fund. These are usually paid out of the funds' management fees.