Financial Advisor Fee or Commission?

[NY_Yankees_Fan]

We have been using a commission financial advisor for the last 10 years. He makes his $$ on what he sells us. He is in the process of retiring, so we need to start looking for a new advisor. In researching a new advisor we have two options, a fee only or commission advisor. Visited the web site at http://www.napfa.org , The National Association of Personal Financial Advisors, and found several companies close by, have an appointment with one company this week. The concept of a personal advisor is they have no interest in any particular product thus give you the best advice. BUT this advice is not cheap, a minimum of say 1% of the amount they manage for you and or a minimum annual charge of $2500. Just wondering what you do for financial advice? Fee or commission, or go it alone? With so many options, tax, etc, I do not see how you can do this alone without advice from a professional with college, retirement expenses going up every year. I have no hope that social security will be around when I retire.

 

[MossRoad]

We mostly go it alone. However, sometimes we need advice. Our credit union gives free advice. Our company has a 401K and the company that administers it brings in an advisor each year, too. That is not one on one advice, but general advice. I also read, read, read.

It ain't like the old days(thank goodness), where you had a savings account and that's it. Today, it's 401Ks, pensions, IRAs(Roth), college funds, real estate, bank accounts, cash, assets.

For our situation, I cannot see paying someone $2500 a year to tell us what to do with our money. If I put $200.00 a month in a fund that returns 10% a year for 40 years I'll have about $1.2M. If I pay someone $2500 a year for 40 years it will cost me $100K. /forums/images/graemlins/shocked.gif Some folks don't have such a simple situation as ours. The more complicated, the more expertise you will need. So, for some folks, it may be worth the $2500 if the person is earning their keep. /forums/images/graemlins/wink.gif

 

[sneaky_pete]

My financial planner is the fee type. I'm happy with the arrangement; he doesn't churn my portfolio to make commissions, and his annual fee is a sliding scale - it's less of a % if the portfolio doesn't make a big return and a little more if it does. Keeps him incentivized to make me a good return. When my investments are doing well, I gladly pay the fee.

I used to do all my own research and investing and did pretty well at it, but my portfolio got big enough that it took a lot of time to look after, and I was afraid to make a costly mistake, so I hired a professional. It has been worth it to me, but as always Your Mileage May Vary.

Pete

 

[goodoleboy]

Radio host Clark Howard reccommends FEE only advisors offer the best non biased advice.
I manage all my change myself, but I can see where fee only adv. makes sense.

 

[reb]

We have gone it alone, but listen regularly to radio financial advice programs, notably Ray Lucia's program. Because I don't have enough money for adequate diversification in stocks, I go with no-load mutual funds. That doesn't require an extra manager. If I were to go with an advisor, I would probably look for an experienced fee-only advisor. Even with a financial advisor, you might find it worthwhile to listen to some of the radio financial talk programs occasionally.