What are the different ways financial planners charge for their services?
As fee-only planners, we charge for our services either on an hourly basis or as a percentage of total assets that we manage for clients. Frequently, a client just needs a little guidance or advice making an important financial decision, and for that, we charge an hourly fee. There are also commission and fee-based planners. A commission planner usually sells one or more different investment products, such as mutual funds or annuities, from a particular brokerage house or insurance company. This type of planner then receives a commission from that brokerage house or insurance company for placing clients’ money with them. The problem with this system, we feel, is that it either destroys or seriously impairs the objectivity of the planner. A commission planner makes his or her money through commissions and is more likely to place the money where it will earn a commission, not necessarily where it might serve the best interest of the client. A fee-based planner charges clients based on th
