How is your financial advisor compensated?

Maybe you have a general understanding or no idea. It’s not the same throughout the industry, and different compensation models can have an impact on your overall return.  Keep in mind “fee-only” is not the same as “fee-based.” It’s important to make sure you are 1) comfortable with the cost of your services and 2) clear with how you are being charged. Does your advisor earn commissions?  What about a sales load when certain products are purchased?

As a fee-only financial advisor, I don’t receive compensation by recommending certain investments over others – no commissions, kickbacks, referral fees, or sales loads.

It’s also important to note that I’m considered “independent,” which means I’m not required to sell the products of a particular firm or those favored by an employer.

What I am required to do is be a “fiduciary.”

What’s a fiduciary?  A fiduciary is someone who manages assets on behalf of another person with good faith and trust.  I abide by a fiduciary duty, which is an ethical obligation to act solely in the best interest of my clients.

Are there any downfalls to working with a fee-only financial advisor?

I don’t sell insurance products, as those are typically commission-based.  However, I firmly believe insurance is part of a comprehensive plan.  I have relationships with a handful of insurance firms that work exclusively with fee-only advisors to recommend suitable insurance products, provide you a quote, and ultimately write the policy. It’s important to note that I do not get compensated for engaging in this process.

At the end of the day, my incentive is to deliver advice that’s in your best interest.  Period.

As always, feel free to reach out if you have any questions or concerns.  I also encourage you to check out the Fee-Only Network for more information.