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Pam Krueger is the creator of the award-winning MoneyTrack investor-education television series seen nationally on over PBS stations. Pam's also the founder and CEO of Wealthramp. Skip to header Skip to main content Skip to footer. Home Financial Planning. Financial Planning. Fee-only is about your interests, all the time When you hire a fee-only fiduciary investment adviser to manage your investments, develop a financial plan, or both, you alone are paying a financial professional who is legally and professionally committed to acting solely in your best interests — otherwise known as the fiduciary standard.

Financial planning fees Financial planning fees are based on complexity and time spent to develop a detailed plan. Investment management fees Investment advisers tend to charge an annual fee based on the value of the assets they manage for you — known as assets under management AUM -based fees. These fees pay for a variety of tasks the adviser carries out on your behalf, including: Recommending a targeted mix of stock and bond investments based on your financial objectives and risk tolerance.

Researching and selecting investment options for your portfolio. Placing trades. Monitoring and reporting performance. Periodically rebalancing your account to its original investment mix. This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.

A fee-only financial planner sounds strikingly similar to a fee-based financial planner, but there's a big difference in how they get paid. Here's what you should know about fee-only and fee-based financial advice:.

A fee-only financial planner is paid directly by clients for their services, be it a flat fee, hourly rate or a percentage of assets under management.

Their fee-only pay structure means they do not receive commissions or other payments from the providers of financial products they recommend to clients. Ask if your financial planner is a registered investment advisor or a certified financial planner — both types are fiduciaries. This is an important consideration when choosing an advisor.

A fee-based financial planner gets paid by the client but also via other sources, such as commissions from financial products that clients purchase. This can set up a conflict of interest, as the advisor charges you for advice while steering you toward investment products from which the advisor profits.

Ask if your financial planner is a broker or a dealer, also known as a registered representative. The document includes information that spells out how brokers at the company are compensated.

Fee-based advisors cannot be paid fees and earn commissions from the same pool of investments they manage for a particular client. However, they can earn commissions for selling them other kinds of products.

A fee-based financial advisor charges her client 0. At some point, the client decides he needs term life insurance and asks the advisor for recommendations. The advisor recommends several different options offered through her broker-dealer.

Fee-based advisors must tread very carefully in these situations. She should also clearly explain how much commission she herself will earn for selling each policy. Not necessarily. If you only want your advisor to manage your investments, both fee-based and fee-only advisors can do so in a fiduciary capacity. If these potential conflicts worry you, a qualified fee-only advisor might be a more appropriate choice. Fee-based financial advisors also make money through the fees their clients pay.

Just as with fee-only advisors, these fees are often based on a percentage of AUM. However, the advisor also may charge clients flat fees, hourly fees or performance-based fees.

Unlike fee-only advisors, fee-based advisors may also earn money through other means. Here are three main ways that fee-based advisors could make money:. Unlike financial advisory fees, these fees are not directly tied to the amount of money in your account. This makes increasing the value of your account less important to the advisor. Moreover, these fees present potential conflicts of interest.



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