My current Financial Advisor is paid a salary by their firm and not by commissions. If my Financial Advisor does not receive commissions directly, does a conflict of interest still exist?
Perhaps. Even if your financial advisor is paid a salary, the advisor’s firm may be accepting commissions from the sale of financial products. There may be quotas placed on the “salaried financial advisor” in order for the advisor to justify their salary to the firm. If the advisor does not generate enough commissions for the firm during the course of the year the advisor’s salary may be reduced. In addition, most financial advisors who are paid a salary by their firm also receive quarterly or annual bonuses based on their sales or “production”. Although these advisors are not relying on commissions for 100% of their income, even a small conflict of interest (such as a year-end bonus) could potentially compromise the advice that you receive.
financial advisor pay in discount brokerage firms that offer no financial advice and simply fill orders for their clients typically is a straight salary with bonuses based on overall firm results. These brokers are financial advisors in a very limited legal sense.
Source: http://financecareers.about.com/od/commissions/a/FinAdvisorPay.htm
Related Questions
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