Commission, Fee Based or the Combo?

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

Published by Jason Comes | @Jason_Comes

Which is the best way to compensate someone who helps you with your investments/finances? Would paying per transaction be best or via a percentage of the assets? Do you think the advisor could be objective if he or she would earn a commission investing your assets in a product?

These are all great questions and important ones’ consumers need to ask an investment firm before doing business. In an environment like we’ve been in the past 18 months, investment management fees and commissions can eat up your annual returns or your net investment. I believe the best way to compensate an investment firm is hiring a fee based financial planner who doesn’t earn commissions-one whose own income is based on the value of your account (this means if your account is lower, their income is lower and vice versa).

Another important thing to watch is what type of investments your financial advisor will be investing your money in; stocks, bonds, mutual funds, Exchange Traded Funds (ETFs) or annuities. If stocks and bonds, then you may have fees per transaction. If the choice is mutual funds and/ or ETFs, you’ll have recurring annual fees. It is important to know how the advisor will be allocating your investments to keep track of these fees.

All in all, do your due diligence before hiring an investment firm by interviewing three firms about how they are compensated AND what services you will receive. Ask them if they will be giving just investment advice, or do they specialize in other areas such as estate planning, tax planning or even risk management, such as life insurance. How much experience does the advisor and key people have in all of these areas, what designations do they hold… CFP®, CPA, ChFC, CFA etc.? Ask the tough questions as you will be glad you did before making one of the most important decisions of your life.

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

4 Hurdles in Retirement Beyond Your Investment Portfolio

Becoming hyper-focused on only one aspect of a problem is pretty much never a good approach. A racecar driver who only focuses on speed and ignores strategy won’t win races, at least not many of them. A carpenter who only hammers in nails won’t build strong structures. 

Your Silicon Valley Bank Questions Answered

You likely have heard about the recent Silicon Valley Bank (SVB) collapse and probably have questions. Here, we provide you with unbiased answers to your questions.

Thinking About Retiring Early? 8 Things to Consider First

Tom Fridrich, JD, CLU, ChFC®, Senior Wealth Planner We’ve all asked ourselves whether it’s too early to retire (usually after a particularly challenging commute or dealing with a difficult client).  You may have even gone so far as to take a sneak peek at your account statements …

4 Tips to Take Your 401(k) to the Next Level

Matt Kory, Vice President, Retirement Programs As a retirement income vehicle, the 401(k) is second in popularity only to Social Security – and as CNBC reported in 2019 the number of 401(k) millionaires is at an all-time high. But is a million dollars even enough for your retirement needs? 

1 2 3 82 83 84

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation