Whether you are starting your career or starting your retirement, finding the right financial advisor can be overwhelming. Using online resources and asking trusted relationships can be a helpful starting point, but asking one question can help you quickly narrow in your search:
"Are you Fee-Only?"
By starting with understanding how an advisor is paid, you will quickly see the advantages and impacts of the type of service you will receive. We hope your advisor responds with a resounding "yes."
What Does Fee-Only Mean?
A Fee-Only advisor is solely and directly compensated by their clients for the advice and services offered. This might be in the form of an hourly rate, a monthly fee, or a percentage of the investments managed. But in all cases, the advisor does not accept any fees or compensation based on the product recommendations.
Other types of financial advisors, like commission-based agents and brokers and "fee-based" advisors are paid at least in part by the companies whose products they recommend. Currently, these advisors are not required to disclose to you what/how much their commission or revenue sharing is. Often, fee-based or commission based are limited to recommend products of the the company that they work for. We hope that commission-based agents are honest people doing honest work for their clients, but charging fees based on products or transactions could completely miss much of what you need in your financial plan.
Quick FYI: Don't be dubbed by the term "fee-based." Fee-based means the advisor can charge a fee in addition to collecting commissions.
What's the Advantage of a Fee-Only Financial Advisor?
Eliminating Inherent Conflicts of Interest: Fee-Only financial advisors have a fiduciary responsibility to act in their clients' best interest.
Comprehensive Advice: Because our compensation isn't reliant on selling a specific investment or product, fee-only financial advisors are incentivized to provide their clients with the highest possible level of service and put more solutions on the table.
Seek the advice of a Fee-Only Financial Advisor because financial incentives matter.