How does my investment advisor get paid?

How does my investment advisor get paid?

Scott Leonard, CFP (President, Leonard Wealth Management, Inc.) gives expert video advice on: How can I analyze my advisor's performance?; How do I choose the investment advisor who is right for me? and more...

There's really two main ways in which a financial professional is going to be compensated. There is commissions, through the sale or implementation of a product, or there is a fee, and that fee could be an asset based fee, a percentage of investable assets, or just an annual retainer fee, or even an hourly fee. Within that realm there are many different shades of gray. There is a fee only. A true fee only means that the only way in which someone can be compensated is purely by a fee paid by the client. Fee based is someone who can do both. They might be taking their fees based on assets, or based on an hourly type arrangement, but they can also take commission fees. Then there might be someone who is 10% commisions, really those are for the sales and implementation of a product.