Choosing a Financial Planner
Fee Based Financial Planners
A smaller part of the financial planning market is occupied by fee based financial planners. Unlike financial advisors who work strictly on commission, fee based advisors are also paid by their clients, either on an hourly basis or as a percentage of the portfolios they manage.
The problem is that fee based advisors can fall victim to the same conflicts of interests as their commission based peers. Even though they may derive a substantial portion of their income from the fees charged to their clients, fee based planners also are paid commissions, and this can influence the kinds of investments they recommend.
Fee Only Financial Planners
Unlike the other two types, fee only financial planners do not derive any income at all from commissions. This means that they can truly be an independent voice for their clients and that they can recommend investments that are truly in his or her best interests.
When looking for a fee only financial planner it is important to look for an individual who is willing to serve as a financial fiduciary, meaning that the advisor takes on a legal obligation to act in the best interests of the client at all times. Be wary of any financial planner who will not agree to act as a financial fiduciary.
Finding a financial advisor you can trust is never easy, but in the end the results are well worth the effort. Putting your hard earned money in the hands of a financial advisor who makes poor recommendations based on his or her own self interest can set your financial goals back many years, so it is definitely worth your while to look for an advisor you can trust.
