Reasons You Must Go With Fee-Only Financial Advisors
While some manage to chalk out their private financials without any external assistance, the majority still depends on professional financial mentors to guide them through the process. There are different types of financial advisors and the decision to hire a specific type usually hinges around the “value-for-money” ideology. If this is your first time resorting to third-party financial planning assistance, continue reading to understand how fee-only advisors provide more bang for the buck.
Fee-only financial advisors, unlike commission-based brokers and agents, aren’t tied to certain transactions and products. They don’t depend on a brokerage company, mutual fund firm or an insurance firm for income other than their primary clients. In other words, they will most likely not get swayed by any personal advantages that could come with offering certain recommendations. Their suggestions and advice are always in alignment with what the clients need and what suits them the best. This means increased objectivity and less bias.
Fee-only advisors adopt other, more independent ways of charging such as a flat retainer or an hourly rate. They earn this income regardless of the outcome of the planning discussions; thereby giving them increased freedom.
The primary service of fee-only advisors consists of portfolio analysis as a whole. This obviously means the advisor is adept in various asset classes, such as real estate, tax preparation or planning and retirement, college financial aid, etc. This versatility and multi-domain knowledge further translates into more reliability and expert advice.
Time And Cost Savings
When compared to commission-based advisors, fee-only financial consultants are much more cost-efficient when viewed from a wider perspective. For instance, if you make a $70,000 outlay in an endowment with a 4% load, the commission-based financial mentor will purse $2800, which will be equivalent to more than 15 hours of portfolio analysis and planning carried out by a fee-only advisor at $180 per hour.
If put at work for 15 hours or more, a fee-only financial guide could accomplish much more substantial work that will help shape a more balanced financial portfolio, giving back a potentially loftier rate when compared to the loaded mutual investment.
Simply put, fee-only advisors offer investors the scope to extract extra service from the money spent on professional financial planning.
“Fee-only” and “fee-based” don’t carry the same meaning, even though the terms are interchangeably used to denote the same purpose. Fee-based advisors receive commission payments from mutual fund firms, investment partnerships and other third-party institutions, in addition to the fees paid by individual clients. Therefore, learn to distinguish between these types of financial advisors since the loyalties of fee-based advisors are clearly divided. For more information, contact a financial advisor like John Osborne & Associates.