Why is Fee-Only Compensation important to the client?
A financial planner who has a financial stake in the course of action that he or she recommends to a client faces an inherent conflict of interest and their advice cannot be considered objective and unbiased. This is true even if the planner truly believes that he or she has only the best interests of the client at heart. The vast majority of financial advisors are sellers of financial products. Some or all of their income is dependent upon their ability to steer their clients to a limited number of the thousands of financial products available today. Financial Advisers who work for large institutions (banks or brokerages) often have extra incentives for advising clients to buy their employer’s financial products. These advisors include stock-brokers, analysts, insurance agents, accountants and attorneys, as well as financial planners. Many clients are not aware of their advisors’ dependence on selling products, or do not recognize its significance. We believe that some of the problems
