Did you know that only 30 percent of consumers in the United States of America use a financial advisor? One big thing that makes many people balk when considering using a financial advisor is the financial advisor fees you’ll face. You need to accept that the fees for financial advisors are the price you pay for great financial advice for your future.
There are two main options that you need to consider when it comes to working with independent financial advisors. You can go with a fee-based financial advisor or you can go with a fee-only financial advisor.
The good news is that you’ve found the perfect place to learn the differences between these two financial advisors and the pros and cons of each. Keep reading this article to learn more today!
What Is a Fee-Based Financial Advisor?
Most financial advisors choose to charge their customers different fees for different tasks that they need to be performed. Creating an estate plan is something that a fee-based financial advisor would charge you for. Other financial advisors might charge an hourly fee for their help.
One thing that sets a fee-based financial planner apart from your other options is the fact that they get commissions in addition to the fees that they charge. Odds are that they will try to sell you products to earn that commission.
Pros of Fee-Based Financial Advisors
One of the big benefits of choosing to go with a fee-based financial advisor is the transparency that you’ll get. The financial advisor is required to report the fees that they charge and receive for their help. The fees are also helpful because they offer a strong base income for the financial planner you’re working with.
Having a strong and steady income decreases the amount that these advisors will push additional products. The commission also adds the benefit of allowing the planner to keep their fees lower. It makes their service more accessible for smaller investors that need their expertise.
Cons of Fee-Based Financial Advisors
The main thing to look out for with fee-based financial advisors is the possibility that they put self-interest ahead of planning for your best financial future. If they’re more concerned with how much money they’re making then they won’t set you up for success. This could happen in the form of padding their investment portfolio with your assets.
What Is a Fee-Only Financial Advisor?
A fee-only financial planner is someone that gets paid straight from their clients for the services they’re providing. They might charge a flat fee or an hourly rate. It might also be a percentage of the assets in the client’s portfolio.
If the fee-only financial advisor charges based on a percentage of assets then odds are that they’ll want around one percent of the assets in your portfolio each year. You can check out Consilium-ifa.co.uk to look into hiring a fee-only financial advisor to work with.
You’ll get comfort in knowing that they don’t receive commissions or payments based on selling you products or services. These advisors are required to put your interests first ahead of their own. You’ll get peace of mind that they’re going to help you.
Pros of a Fee-Only Financial Advisor
One big reason why you should consider using a fee-only financial advisor is that they act as fiduciaries. This means that they’re required to put your interests ahead of their own when providing financial planning and advice. They’re bound by the law to maintain ethical obligations.
You’ll get helpful and accurate advice that is free of any potential conflict of interest. The cost is another big pro of going with a fee-only financial advisor since they’re often more predictable than going with a fee-based planner. You can budget for the cost of your fee-only financial advisor.
It is also one of the best ways to put together a strong and cohesive financial plan for your future. They will not only help you build your investment portfolio but they’ll also help you with other aspects of planning for your future. Make sure that you’re working with someone that will help you look at all aspects of your financial future.
They’re the most foolproof way of getting sound financial advice for planning your future. If you want to avoid a conflict of interest then you should take this option.
Cons of a Fee-Only Financial Advisor
The main drawback that people bring up when it comes to hiring a fee-only financial advisor is that there is room for error with this planning method. You need to consider the quality of the financial advice that you’re receiving before you take any actions with your financial planning. You also need to accept that the financial advisor might ignore or write off simple ideas since it reduces the need for their services and knowledge.
They also tend to be more expensive than fee-based financial planners when you’re planning for your future. Their entire income is based on clients that can pay for their services. The fees that financial advisors charge could be a barrier to entry for many people seeking help.
There is also the possibility that a fee-only financial advisor will only help you with a limited amount of aspects of planning your future. There is a limit to how much they can help you set yourself up to live in a comfortable fashion. Odds are that you’ll need to find a specialist that can help you with more precise aspects of preparing for your future and your retirement.
Hire a Fee-Based Financial Advisor Today
If you’re worried about managing your money for the future then you need to look into hiring a fee-based financial advisor. They can offer lower fees thanks to the commissions that they receive in exchange for their services and products. Your other option is a fee-only financial advisor, which offers peace of mind since they’re required to put your interests first.
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