Fee Only Financial Planner

A fee only financial planner may only get compensation directly from an individual. He cannot get compensation from a mutual fund company, a brokerage firm, an insurance firm, etc. They therefore represent an individual and his interests when offering advice.

The main benefit of seeking the services of this kind of advisor is that the system of payment is more transparent than various other systems. This therefore means that an individual will always be aware of how much he is paying for monetary advice. In addition, his advisor is unlikely to have a conflict of interest.

These planners normally charge their fees as a percentage of the assets they manage for a client. Hence, their fees are debited out of one’s account every quarter, or it may be an hourly rate, or flat yearly charge. This all depends on the agreement with the client and their terms and conditions.

These advisors are usually difficult to locate in most places. Most of them are normally paid by commission. In this commission model, advisors receive most of their earnings in the form of commissions for selling funds to clients. Nevertheless, a small class of advisors have preferred the ‘fee-only’ model of payment, in which they receive 100% of their earnings from their clients, and no cash from fund firms.

If one hires an advisor who provides various methods of payment, it is recommended that he uses the hourly fee choice. This choice puts a person’s interests in line with that of his advisor. One’s advisor is unlikely to get payments from insurance companies and mutual funds for selling him a product.

Nonetheless, no matter which payment choice one uses, he ought to always ask his consultant to list all fees and commissions he gets in writing. He must ensure he also includes all his sales commissions, referral fees, and trailer fees. This will help one in knowing all the costs he might be charged by his advisor.

The main disadvantage of hiring a fee only planner is that most of them are not licensed to sell investments directly to a client. Hence, they provide a client with a general plan and he has to put it into action himself. Generally speaking, these planners are best for individuals with plenty of cash to invest who have no problem with buying and selling their own assets. When hiring this type of advisor, it is usually recommended that one carries out a thorough interview of around four candidates before opting for one.