Advisory Fees

Advisory Fees


However, a fee-only advisor cannot collect compensation from a mutual fund, brokerage, insurance company, or any other such firms other than you. So this means when they give you advice they represent your interests. After all, they get their earnings only when you benefit from their services and it gives you an idea of who they are loyal to.

There are a few things that you need to keep in mind about the two types of financial advisors that you are likely to come across.

A fee-only advisor is a no commission advisor and receives his engagement fee ONLY from you whereas a fee based advisor is a commission based advisor and receives his fee from you as well as a commission from the company whose products he sells to you.

A fee-only advisor will use low cost funds in your account and minimize the overall expenses that you pay compared to a fee based advisor who is more willing to take risks with your money, knowing that the potential costs or burden of taking such risks will be borne partly or entirely by you.

A fee-only advisor has a fiduciary responsibility to pick investments that are best for you however a fee based advisor does not have to disclose their methods of compensation which can confuse the clients on whether the advisor is actually working in their interest or perhaps for a commission.

A fee-only advisor may charge a percentage of the assets they manage for you verses the fee based advisors who would charge a percentage of the assets they manage for you and a commission on the products that he sells for a firm.

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