How does financial advisors make money?
Question:
Answer:
They either get paid up front by you. This arrangement is good because you know exactly what your paying and the adviser should have no biases to steer you towards certain investments.
The other method they get paid is by commission from the fund companies who own the portfolios that they advise you to invest in. This means a percentage of your income from the investments goes to the adviser. Advisers tend to offer funds with higher MER's than hourly paid advisers.
That can make a huge difference in your return.
Those are the facts.
By charging either a fee on the accounts they handle or billing by the hour for the consultation.
They charge a fee. You can do the same thing for yourself but you need to read about stocks.
By selling you the worst product you will buy and still be happy, so they can invest your money in investments with better returns.
I honestly don't know, I do it myself, I average a conservative 25%, every "adviser" seems to have different ideas, they all seem to want to sell you "safe" investments "for your own good"
They either get paid by the hour or by a percentage of the money in the account. That's called a fee-only advisor. Or they get paid a commission on the financial investments they sell you.
Usually, by screwing over their clients.
Check what most advisors do with their own money against what they reccommend for your money.
Huge f'in difference.
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