Fee only - why should I care?
A Fee-Only planner receives NO fees from any third party.
Fee-Only advice results in objective advice that meets your specific needs. Because a fee-only planner receives no commissions of any kind, or referral fees from accountants, attorneys, insurance professionals, or anyone else, there is no incentive to recommend a product or service unless it's in your best interest.
What does it mean to be “Client-centered”?
Every financial advisor wants to believe that they are “Client-centered”, but, if product sales goals and commissions are what drives a person’s compensation, what is their goal when they set an appointment with you? Financial products are complex. It’s easy to be sold a concept - not always easy to decipher what you are buying. That’s when you need to depend on the interpretation of the person sitting in front of you. A Fee-Only advisor takes no commissions and has no products to sell. This removes most of the road-blocks to unbiased advice.
In contrast, commission or fee-based planners are compensated entirely or in part, on commissions from products recommended and sold. Both commission and fee-based planners have an incentive to invest their clients' money in products that pay the highest commissions. There's a significant conflict of interest if an advisor stands to gain personally from any specific action recommended to a client.
What are you paying your financial advisor?
The Fees that you pay for financial plans and investment management are an important factor in your returns over time. Being aware of your costs, whether through sales commissions, mutual fund expense ratios, asset management fees, flat fees, or hourly fees, is an important part of establishing control in your financial life.
Some advisors are straight-forward with their charges for managing your investments. They will charge you 1% or 1.5% of the total amount of money you are investing with them. “For your convenience”, that charge will be automatically deducted from your account, and you won’t notice it is gone. It may be more painful to write a check, or transfer funds to pay your fee-only advisor; but, you're consciously parting with this amount of money, because the advice, the plan, or the service of managing your money is worth it to you. That is “money-awareness”. Know what and how you're paying your advisor.
Some advisors will tell you, “Why should you pay me? Let the mutual fund, or insurance company pay me.” Most of these advisors use “sales loaded” mutual funds, or expensive insurance products to invest your savings in. And you are paying them - by being charged sometimes twice the expenses of the same mutual fund you can purchase with no sales load, or high fees within an insurance product, not because your advisor means you harm, but because this is what they need to sell to get paid.
Unfortunately, the higher fees can have a significant negative impact on your returns over time. Know what and how you're paying your advisor.
Fee-Only advice results in objective advice that meets your specific needs. Because a fee-only planner receives no commissions of any kind, or referral fees from accountants, attorneys, insurance professionals, or anyone else, there is no incentive to recommend a product or service unless it's in your best interest.
What does it mean to be “Client-centered”?
Every financial advisor wants to believe that they are “Client-centered”, but, if product sales goals and commissions are what drives a person’s compensation, what is their goal when they set an appointment with you? Financial products are complex. It’s easy to be sold a concept - not always easy to decipher what you are buying. That’s when you need to depend on the interpretation of the person sitting in front of you. A Fee-Only advisor takes no commissions and has no products to sell. This removes most of the road-blocks to unbiased advice.
In contrast, commission or fee-based planners are compensated entirely or in part, on commissions from products recommended and sold. Both commission and fee-based planners have an incentive to invest their clients' money in products that pay the highest commissions. There's a significant conflict of interest if an advisor stands to gain personally from any specific action recommended to a client.
What are you paying your financial advisor?
The Fees that you pay for financial plans and investment management are an important factor in your returns over time. Being aware of your costs, whether through sales commissions, mutual fund expense ratios, asset management fees, flat fees, or hourly fees, is an important part of establishing control in your financial life.
Some advisors are straight-forward with their charges for managing your investments. They will charge you 1% or 1.5% of the total amount of money you are investing with them. “For your convenience”, that charge will be automatically deducted from your account, and you won’t notice it is gone. It may be more painful to write a check, or transfer funds to pay your fee-only advisor; but, you're consciously parting with this amount of money, because the advice, the plan, or the service of managing your money is worth it to you. That is “money-awareness”. Know what and how you're paying your advisor.
Some advisors will tell you, “Why should you pay me? Let the mutual fund, or insurance company pay me.” Most of these advisors use “sales loaded” mutual funds, or expensive insurance products to invest your savings in. And you are paying them - by being charged sometimes twice the expenses of the same mutual fund you can purchase with no sales load, or high fees within an insurance product, not because your advisor means you harm, but because this is what they need to sell to get paid.
Unfortunately, the higher fees can have a significant negative impact on your returns over time. Know what and how you're paying your advisor.
