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Types of fees
The Most Common Type of Financial Advisor Fees are:
The AUM fee structure is typically the most commonly offered. It encompasses comprehensive financial planning and investment management services. The fee is typically calculated as a percentage of the assets being managed. In addition to providing holistic financial planning for their clients, under this fee structure, the advisor also creates a customized allocation that directly relates to the financial plan. They implement and maintain the portfolio which includes trading, rebalancing, and tax-loss harvesting throughout the year.
Flat-fee relationships are financial planning focused. The advisor will not directly manage your investable assets but can provide guidance on your investment strategy. In this type of relationship, the advisor focuses on cash flow, tax strategy, and financial planning to help you achieve your short and long term financial goals. These are typically ongoing relationships so the advisor can update and adjust your financial plan as your life changes.
The AUM fee structure is typically the most commonly offered. It encompasses comprehensive financial planning and investment management services. The fee is typically calculated as a percentage of the assets being managed. In addition to providing holistic financial planning for their clients, under this fee structure, the advisor also creates a customized allocation that directly relates to the financial plan. They implement and maintain the portfolio which includes trading, rebalancing, and tax-loss harvesting throughout the year.
The AUM fee structure is typically the most commonly offered. It encompasses comprehensive financial planning and investment management services. The fee is typically calculated as a percentage of the assets being managed. In addition to providing holistic financial planning for their clients, under this fee structure, the advisor also creates a customized allocation that directly relates to the financial plan. They implement and maintain the portfolio which includes trading, rebalancing, and tax-loss harvesting throughout the year.
The AUM fee structure is typically the most commonly offered. It encompasses comprehensive financial planning and investment management services. The fee is typically calculated as a percentage of the assets being managed. In addition to providing holistic financial planning for their clients, under this fee structure, the advisor also creates a customized allocation that directly relates to the financial plan. They implement and maintain the portfolio which includes trading, rebalancing, and tax-loss harvesting throughout the year.
Questions to Consider
Questions to Ask a Financial Advisor about Fees
When conducting your own due dilligence, be sure to ask your advisor the right questions. Here are some specific fee-related questions you should ask any advisor before hiring them:
If the answer is “Yes,” the follow up questions should be “are you associated with a broker-dealer?” If the answer is “yes,” be aware that advisors associated with a broker-dealer have significant monetary incentives to sell products that might not be in your best interest.
This should be a “No”. Some advisors will say that they do not receive commissions specifically, but they actually still receive backdoor kickbacks that you are paying via 12-1B fees from mutual fund companies. Those additional fees can range from 0.25% to 1%, which can really add up!
The answer should be “No”. If they receive any type of commission, they will be biased and unable to work in your best interest.
The answer here should be “Yes.” Just like when you receive your receipt at a restaurant, you want to know exactly what you’re paying for.
If the practice has more than 200 clients per advisor, then its important to find out how much support staff does the advisor have to service the client. If an advisor has primary coverage of 600 clients, it is fair to assume that they do not offer a high-touch service. Thus, fees should be well below what full-service advisors charge.
When conducting your own due dilligence, be sure to ask your advisor the right questions. Here are some specific fee-related questions you should ask any advisor before hiring them:
If the answer is “Yes,” the follow up questions should be “are you associated with a broker-dealer?” If the answer is “yes,” be aware that advisors associated with a broker-dealer have significant monetary incentives to sell products that might not be in your best interest.
This should be a “No”. Some advisors will say that they do not receive commissions specifically, but they actually still receive backdoor kickbacks that you are paying via 12-1B fees from mutual fund companies. Those additional fees can range from 0.25% to 1%, which can really add up!
If the answer is “Yes,” the follow up questions should be “are you associated with a broker-dealer?” If the answer is “yes,” be aware that advisors associated with a broker-dealer have significant monetary incentives to sell products that might not be in your best interest.
If the answer is “Yes,” the follow up questions should be “are you associated with a broker-dealer?” If the answer is “yes,” be aware that advisors associated with a broker-dealer have significant monetary incentives to sell products that might not be in your best interest.
