Types of advisors based on fee
A fee or
remuneration is the most important factor for which we offer our service. The
profession of a financial planner is no exception. The advisors can be divided
on the basis of the fee they charge, namely, based on commission, based on a
fee, and based on fee-only.
·
Commission-based
Under this
category, the advisors advertise products like insurance, annuities, mutual
funds, and other related financial instruments to their clients and in lieu of
selling these, they receive a commission on such sale. Big financial institutions
appoint them to do this business. The advisors who charge a fee on the basis of
commission often are seen to influence their clients in order to sell their
financial instruments and earn commission on their sale. The question of
conflict of interest arises in this case. One should use their understanding
and wisdom while appointing such advisors.
·
Fee-based
Comparatively
new to this category, these advisors also work under the brokers and agents in
order to earn a fee, similar to the commission-based advisors. The advisors who
fall under this category usually are licensed ones. They provide financial
assistance in lieu of the fee but in this case, also the question of conflict
of interest often arises as the recommendations made by these advisors may be
influenced in order to sell their financial instruments and receive a fee on
the basis of it.
·
Fee-only
This is the most
preferred and recommended one under this category. The financial planners who
fall under the fee-only based type of remuneration have a fiduciary obligation
and responsibility to act and take decisions that will be the best for the
interest of their clients. They provide financial plans without being under the
influence of any third party and hence, assist the clients in a non-biased way.
The remuneration earned by them is either on an hourly basis, or a flat
percentage is charged by them or they charge a certain percentage of the total
value of the asset that is managed by them. The services provided by them are
also more diverse and comprehensive one. They provide assistance on investment
management, wealth management, estate planning, farms selling, educations,
taxes, insurance and many others. There are planners like Arizona
Financial Planner which
provide their services under this category.
How to choose the best out of the lot?
Financial
planning is a lucrative job that has been on a demand for a substantial amount
of time. One can find financial planners everywhere waiting for an opportunity
to grab. The main challenge that lies ahead of you is to choose the most
suitable one out of the huge herd of the advisors. Once you jump into searching
for a financial planner, chalk-out the points and expectations that you have in
your mind and accordingly shortlist them. Make sure you meet quite a few
professionals belonging to this field before you fixing on one. As you will be
entrusting your assets and money on these financial planners, hence it becomes
imperative to take steps cautiously while appointing them.
