SYRACUSE FINANCIAL ADVISORS

Types of Financial Advisors

A common mistaken notion about financial advisors is that their services are free. Numerous investors give little emphasis to the undisclosed costs they pay when a financial advisor recommends stocks and later receives a commission when investors buy in, or when an expert mutual fund manager picks stocks for a fund that charges significant management fees or front or rear loaded payments.

Fee-only

Fee-only advisors have a different set up. They receive 100% of their compensation directly from their clients and have no conflicts between their own interests and those of clients created by commissions or referral fees paid by other product or service providers. Normally they ask for a fixed hourly, daily or per visit rate. If the financial project is big, the advisor can even receive a salary-type of paycheck, wherein he or she receives his compensation monthly or twice a month.

The fee-only financial advisor is a newer type of financial professional who normally charges a flat hourly rate for his or her services, instead of taking compensation from commissions on investment transactions. The fee-only advisor's services consist mainly of analyzing portfolios as a whole, so he or she is most likely schooled in many different asset classes, as well as other areas such as real estate, college financial aid, retirement and tax planning/preparation. Here we take a look at the fee-only financial advisor's place in the financial world and how this type of professional compares to those who are compensated by means of commissions.

As long as big business is concerned, the fee-only type of compensation provides investors with the opportunity to get more service out of the money they spend on professional advice and stock-picking expertise.

Commission or Fee-based

A fee-based or commission financial advisor charge fees and collect commissions, normally in annuity type and percentage base, depending on the financial productivity of the client.

Most financial advisors work for major firms. These advisors are held to some important obligations. The most critical of these provides the firm with its revenues, with the advisors transferring a certain portion of their earnings to the firm. The advisors’ generate their income by means of commissions, the fees clients pay each time they make an investment transaction. So, it's in the greater good for both the individual advisor and his or her firm to generate increased revenue through maximum trading commissions. Commissions are still the primary means by which investment firms make money, and it'll likely stay that way for the foreseeable future.

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