If you are working with a financial advisor, or considering working with a financial advisor, there’s one question above all others that you need to ask and make sure you get a good answer to.
So what’s that all-important question? It's "How do you get paid?"
What you need to find out is, does that advisor earn any of his income from the sale of investments or insurance products? Because if he or she does, the reality is, that advisor has a bias and an incentive to steer you toward products that pay him or her a commission, and maybe even products that pay a higher commission than other products.
There’s a better way.
When you work with an advisor who does not get paid by commissions from selling you financial products, but instead gets paid only by fees they charge you directly, two things happen.
One, our opinion is that you should end up with better products. The advisor now has free rein to choose the very best solutions for your needs and isn’t confined to just solutions that pay him or her a commission. Oftentimes, you’ll get lower-cost products as well, which makes sense because the financial product doesn’t have to build in the cost of paying the commission to the advisor.
Second, an advisor who is paid by fees from their clients has a fiduciary obligation or requirement to do what is in your best interest over their own. Not so for the advisor who is paid through commissions.
If you’re currently working with an advisor who does receive at least some of her income from the commissions off of the sales of financial products, you might want to consider a “second opinion” from a true fiduciary advisor. Give us a call!
Schedule a complimentary consultation with a fee-only financial planner to discuss your personal situation in more detail.