There are three main types of financial advisors – commission-based, fee-based, and fee-only! Do you know the difference between them? Keep reading to learn more or watch the video below to hear Jeff McCormack, CEO, break down the basics.
The three ways financial advisors make money goes from being pretty old-school, to being kind of new school, to new school.
Commission-based advisors are the old-school way. These advisors are being paid to sell a product, and they are commissioned. This means they are paid a portion of whatever you buy from them!
Fee-based advisors have become the most common in the past 20 years. This kind of advisor charges a percentage of all the assets they manage for you. For example, if you have $100,000, they may charge 1% of that. So, you’re paying them $1,000 per year.
The new school of advisors are called flat fee or fee-only advisors. There are only about 4,000 of them in the country! They do things one of two ways – they may charge an annual retainer to manage your money, or an hourly rate.