We all agree that advisors should be
compensated for their efforts on behalf of their clients. The method of
advisor compensation, its disclosure to the client, and whether it
serves the client’s best interest are the factors that should be
considered by any consumer prior to entering into an advisor-client
It is important for a potential client to
understand the different ways advisors, and their firms are compensated
and how that impacts the clients’ investment returns.
Generally financial advisors are paid either by charging fees or earning commissions.
earn their income by selling financial products such as insurance or
mutual funds, or may also earn a fee for trades that they execute.
Fee-Only Advisors earn
their income by charging fees. Some common methods include an hourly
rate, an annual or retainer fee or as a percentage of investments under
Fee-Based Advisors earn their income using a combination of fees and commissions.
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STRATEGY DISCUSSED ON THIS SITE.