Fees Explained
One of our core tenets is that fees should be straightforward and transparent. This is one of the ways we are rebelling against the financial industry from within. The vast majority of advisors have fees that are hidden, confusing, create conflict, and are inaptly named. Let’s examine the most common ways advisors charge fees then we’ll explain why we chose to be different than most.
Commission: Some advisors receive compensation from a transaction involving a product or service, usually calculated as a percentage on the amount of his or her sales or purchase transactions. Common examples include a percentage of the:
Sale of an annuity or insurance product
Sale of a mutual fund
Purchase or sale of a stock or bond
You may hear an advisor say, “You don’t pay me, the insurance / mutual fund / company that provides the product does.” While it may be technically true that the company providing the product writes the actual check to the advisor, the advisor’s compensation is dependent on the transaction they are recommending to you and you are indirectly paying for it.
Fee Based: These advisors receive both commissions, as described above, and a fee from clients, as described below. This is the one that I consider inaptly named. Sometimes this structure is more appropriately called “Commission and Fee.”
Fee Only: Some advisors’ compensation comes exclusively from the fee they charge clients and they receive no commissions or other payments from the providers of products they recommend. There are still quite a few different ways this can work:
Percentage of Assets Under Management: The client pays a percentage of the assets that the advisor manages.
Hourly: The client pays for advice on an hourly basis.
Flat Fee: The client pays a fixed, flat fee for services.
How We’re Different: We chose the Fee-Only model and, more specifically, the Flat Fee Only model because we felt that was the most transparent, straightforward, and conflict-free way to do business with our clients.
We aren’t beholden to any company nor are we incentivized to recommend certain products to receive a commission. Instead, we can recommend what’s truly best for our clients.
We can help clients who don’t have large investment accounts because we don’t charge based on the percentage of assets we manage. This is also helpful for clients whose investments are held in real estate or a retirement account with their current employer and they can’t transfer it. It doesn’t matter to us – we aren’t compensated in that way and are able to help.
Our fees aren’t hidden and are based on the services we provide. Clients know exactly how much they’re paying and can continually evaluate the value of the services they receive against the price they pay for it.
If you have questions about fee structures or if you’re unsure how you’re paying fees and how much you’re paying, contact us.