How Do Financial Advisors Get Paid?

Excerpts from the Book – Preserving Wealth – written by Jack Lumsden, MBA, CFP®

It is important to understand how a financial advisor is compensated if you hire one. The following is a summary from FP Canada.

How will I Pay for Your Services?

Your planner should disclose in writing how s/he will be paid for the services they provide. Understand how your potential planner will be compensated and choose whatever model works best for you. Planners can be paid in several ways:

1. From the cost of the product: Some planners receive their compensation directly from the product manufacturer when you purchase a product through the planner. For example, their compensation is part of the management fee of the fund. In this case no money is exchanged between the client and the planner. Rather, the cost to the client is embedded in the cost of the mutual fund.
2. Percentage of assets under management: Some planners will charge a fee as a percentage of the assets they are managing or administering on your behalf.
3. Fee-for-service: Some planners charge an hourly or set fee for the service they provide.

Source: FP Canada’s website: Financial Planning for Canadians

A key question that you will want to answer is – 

Are you receiving value for the fees that you are paying?

For more information you can refer to Chapter 4 Tax Concerns, RRSPs, and TFSAs: Protecting and Preserving your Wealth from the book Preserving Wealth: The Next Generation – The definitive guide to protecting, investing and transferring wealth by Jack Lumsden, MBA, CFP®

For your FREE Copy CLICK HERE

What To Do Next

Are You on Track with Your Retirement Strategy? FIND OUT TODAY!

For more information, refer to Preserving Wealth: The Next Generation – The definitive guide to protecting, investing, and transferring Wealth by Jack Lumsden, MBA, CFP® or schedule a call with Jack at 905-332-5503