Financial Advisors: do they advise mainly to make a fee.?
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The best way is to go to a planner that is a Fee-Only planner. They charge you a flat hourly or set rate, no matter what. What you want to steer away from is a commissioned planner, who makes more and more money based on what they can sell you. They they have a very vested interest in selling you more and more of their products. But fee only planners just have an interest in doing the best job possible, so that you recommend them to others, and come back again the next time.
Most financial advisers that are on the big company paychecks are getting salaries and they get bonuses if they make the investors money make money by investing it, so they don't make commission. Now, if you talked to a broker, that is a different story, a broker make money from commissions, anything they sell or buy or trade, they get a certain percentage of those that they sold, bought or trade.
You can't.
There are two types of compensation schemes in play on Wall Street.
The first is commissions. Any adviser, no matter how ethical, will have an inherent conflict of interest when advising you if they earn commissions. These commissions can be earned by steering you towards certain products, such as mutual funds, insurance and annuities, and wrap fee accounts.
The second method of compensation is fee based and usually includes the aforementioned wrap fee accounts. It also includes the method of compensation favored by bank trust departments and advisers who charge based on a percentage of the assets.
These fee-based advisers charge annually a percentage of the assets under management and usually require that they have trading authority over the account but NOT custody (a critical distinction).
This becomes a fairly confusing arena for the novice investor and my advice would be to learn a little more before taking the plunge.
Gail Marks-Jarvis just wrote a superb book that explains in simple language much of these issues in the context of investing for retirement ( Saving for Retirement without Living Like a Pauper or Winning the Lottery) and I heartedly recommend it for anyone who has questions about investing or the fees involved in many financial products.
One important point to keep in mind is that just about any brokerage firm sales person (someone who can sell you a stock, bond, mutual fund or insurance or an annuity) is largely trained as a sales person and not a financial adviser and their rise in a firm, as evidenced by their title (e.g., managing director), is based upon their sales success and not the investment results for their clients.
There are fee-based advisers, often outside the brokerage firm industry, but as is often the case in such matters, the better ones have fairly high minimums, often $500,000 and up . . . way up.
My advice would be to check out Gail's book from the library and learn a little more before entrusting your funds to another.
well... its depends really. i can tell you that as far as insurance goes (the bit i know about) its normaly a rip off. policies w full commission sacrifice can see their premium reduced by up to 10%. Thats 10% of your premium EVERY MONTH!? now im not slagging them off, they know a lot and i'm getting one as soon as my finances get sorted, but there are good ones and bad ones... Some large online brokers will sacrifice commission to bring their prices down, but is it worth paying £3 less and getting no advice?
I'd say, if you pay it, make sure they listen to you and show interest.
You answer yor own question, pick one that is fee based.
of course they do, no-one works for peanuts!
I would recommend going to a one-man-band type company rather than a big company. The big companies are the ones who will charge you a lot on commission, genereally the smaller guys have the clients interest at heart because they dont want to give their company a bad name.
You have every right to discuss every aspect of your policy/prospective policy with a company with your FA, even their commission. Pay strict attention to the 'Charges' Page of any quotes you look at from companies, if the charge seems high you're probably getting screwed by the FA by letting him take more commission in exchange for a high charge to you.
remember - word of mouth is the best advertising, speak to your friends/family about their experiences to find the best IFA for you.
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