Jason Pike | May 2nd, 2023

The 500 Pound Elephant in the Room: Let's Talk Fees

Bank fees, late fees, credit card fees, investment fees. There are a lot of fees in life. Some of them are pretty straightforward, and others are harder to decipher. Fees aren't necessarily a bad thing; they're a form of compensation in some cases. But the lack of understanding around fees can cost you unnecessarily. So let's talk about financial advisor fees.

Fee Structures

The primary reason people don't fully understand the fees financial advisors charge is that there are various fee or compensation structures:

Assets Under Management (AUM): The client is charged a percentage based on the total dollar amount the advisor is managing for them. The higher that dollar amount, the lower the percentage the client pays.

Commission-Based Fee: The advisor receives a commission on the financial products they sell to clients, like insurance policies, stocks, and bonds. The client doesn't pay the commission directly to the advisor: rather, it's included in the cost of the product, and the product sponsor pays the commission.

Hourly Rates: Some advisors charge per hour. This is a flexible option for those who only need occasional advice.

Flat Fee: Flat fee advisors generally offer one-off services for those who need some assistance but not ongoing advice.

What's Right for You

You have the right to ask a financial advisor how their fees are structured and what you can expect for those fees. When choosing the best fit, consider what you need from an advisor. If you need help on a singular issue, an hourly or flat fee advisor may be the correct option. If you're looking for more comprehensive financial planning and a long-term relationship, an advisor who charges AUM may be the best fit.

If you have questions about working with a financial advisor, coreVISION is here to help.