What Types of Financial Advisors Are Out There and How Much to Pay For Them? - Part B

In our last blogpost, we discussed the differences of 5 types of financial advisers.  Now we will discuss how they are paid and how much you should expect to pay for their services.

There are three ways in which financial professionals are paid:

1. Fee-only
A fee-only financial professional is paid based on a fee that could be:

• a percentage of your assets under management
• a retainer/flat fee
• an hourly rate

For example, a financial firm may charge .75 percent of assets under management as their annual fee. This means that regardless of your investment choices, you will pay the .75 percent fee every year. Usually, financial advisors who have a fiduciary duty to their clients are fee-only.

2. Fee-based
Fee-based financial professionals charge a fee for assets under management and a commission for the products they sell.

3. Commission-based
A commission-based financial professional is paid commissions for the financial products that he sells.