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:
- 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.
- 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.
- 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®
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This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. The information provided is for illustrative purposes only. Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.