How are investment advisors compensated?
A. Investment advisors may be compensated in any of the following ways: • Fee-only – the advisor is paid a fee for consultation, plan development or investment management. Fees may be based on an hourly rate, project basis or a percentage of assets under management (UAM). • Commission-only – the advisor is paid for services by a commission on products sold to the client. • Fee-offset – the advisor may offset any fees accumulated for services rendered by commissions produced from products purchased by the client from the advisor. • Fee and commission – the advisor can charge a combination of the two forms of compensation depending upon the type of service rendered. • Salary – some advisors are paid a salary to work for a larger financial services institution.
