Site Search
News

Latest News / Paying For Investment Advice

Paying For Investment Advice

April 1, 2020

Investment advisors may be compensated in several ways.  In some cases, they charge clients a fee for their advice. Sometimes they earn commissions from the investment products their clients buy based upon that advice—life insurance is sold on commission, for example. Sometimes the advisor may earn both fees and commissions.

Trust departments and trust companies earn their bread by charging fees determined by the size of the accounts that they manage.  As the account grows larger, so does the fee; the advisor prospers when the client does.  Trust departments are fiduciaries; that is, under the law they must put the interest of their clients ahead of their own.

“Fee only” financial advisors have become a major category, but there is no legal or regulatory definition of that term.  Writing in The Wall Street Journal, Jason Zweig reported that many discrepancies have cropped up in this area (“ ‘Fee Only’ May Not Be Only Just Fees,” October 21-22, 2017).  Among his observations:

            • An investigation by The Wall Street Journal in 2013 revealed that up to 11% of certified financial planners at major brokerage firms who described themselves as “fee only” were also eligible to receive commissions.

            • A more recent analysis of Securities and Exchange Commission filings reveal that some firms inconsistently claimed to be “fee only” on some forms but receiving commissions on others.

            • Marketing materials for some financial advisory firms also were found to be inconsistent on this point.

Zweig recommended asking questions before hiring a financial planner.  Perhaps the most important would be “Does anybody else ever pay you to advise me and, if so, do you earn more to recommend certain products or services?”  In his view, a yes on that score would be a disqualifier.

 

© 2020 M.A. Co. All rights reserved.

Any developments occurring after February 1, 2020, are not reflected in this article.

Previous PostNext Post

Disclosures

Check the background of this investment professional on FINRA’s BrokerCheck

Located at: 600 E 84th Avenue Merrillville, IN 46410
Phone: (844) 755-6600

Securities and insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Individuals affiliated with this broker/dealer firm are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.

These products and services are being offered through Cetera Investment Services LLC or its affiliates, which are separate entities from, and not affiliates of, Centier Bank or Centier Investments. Securities and insurance products offered by Cetera Investments are: *Not FDIC/NCUSIF insured *May lose value *Not financial institution guaranteed *Not a deposit *Not insured by any federal government agency.

Click here to view Cetera Investment Services Privacy Policy, other Important Information and Business Continuity Plan.

This site is published for residents of the United States only. Registered Representatives of Cetera Investment Services LLC may only conduct business with residents of the states and/or jurisdictions in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information please contact the advisor(s) listed on the site, visit the Cetera Investment Services LLC site at www.ceterainvestmentservices.com

Find a banking center near you. Click Here