Financial Organization, Planning, Budgeting
Why You Should Use a Fee-Only Financial Planner
Financial advisors come in different flavors with a wide range of qualifications and backgrounds. The most important criteria for choosing one should be whose interests they put first. Advisors who earn their income from commissions and fees paid by an employer, such as brokerage firm or bank, are usually limited to selling the products that their employers want them to sell. Advisors who generate their income directly from their clients in the form of a fee, only service the interests of their clients. Because they don't earn any commissions off of products, they are not bound to sell them to their clients. In fact, a true fee-only advisor doesn't sell products.
Many fee-only planners charge a percent of assets under management. Because most of them tend to only work with clients who have more than $250,000 or $500,000 of assets, the average person may not have access to these advisors. Instead, they can work with advisors who charge by the hour in the range of $200 or a flat fee for a financial plan in the range of $1500 to $2500.
If you know how to take full advantage of the resources available to you on the Internet in formulating your goals, organizing your finances, and understanding your risk tolerance, you could be much better off paying an advisor a fee once a year to make sure you are on the right track, as opposed to paying someone commissions and fees on every transaction you make. With discount commission online brokers, and no-load mutual funds or exchange-traded funds, there's no reason to pay a commission broker for something you can do for yourself.