How Are Financial Planners Compensated? Which Type Of Financial Advisor Is Right For Me?

There are a lot of different types of financial planners. Not only are financial advisors paid differently, but also the services they offer differ quite a bit too. Here's a quick summary of the different sorts of financial advisors and the way they can assist you.

Commission Based Brokers: These financial advisors focus on investments and generally sell a product for a commission. Standard brokers are Edward Jones and Ameriprise. If you work with a commissioned broker you could expect to get assistance on asset allocation and investing your own portfolio. Your broker might call you regularly to recommend brand-new investments for your portfolio. In exchange, the advisor would invest your funds and monitor your portfolio on a regular basis (generally quarterly, but may be much more frequent).

Investment Managers: Investment managers or investment advisors handle your investments for you, usually for a portion of the assets managed. The typical payment could vary from 0.5% up to 2.5% of the assets under management. Although a few investment managers can also provide financial planning, the main focus is actually on investments.

Fee Only Financial Planners: With a particular fee only financial planner, you'll pay out an hourly payment for the recommendation you receive. Fee only financial planners offer way more than just investment recommendation. With a fee only financial planner you will normally get a complete financial plan, together with budgeting, investment recommendation, retirement planning, insurance policy assessments, tax planning and estate planning.

Everybody has different requirements, so the kind of advisor that is best for you would rely on your financial requirements and goals. Do you just want someone to propose a suitable mutual fund, or do you want hands on investment management, or do you want a complete financial plan to help you be sure you're on track to retire?

How Are Financial Planners Compensated? Which Type Of Financial Advisor Is Right For Me?
There are many different types of financial planners. Not only are financial advisors compensated differently, but the services they provide vary quite a bit as well. Here is a quick summary of the different types of financial advisors and how they can help you.

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