Financial Advisors - How Much You Should Expect To Pay
Furthermore, the compensation plan used by financial professionals will also vary
. Some may charge you an hourly rate for their services, while others may charge you a percentage of the value of your account.
A personal
Financial Advisor that charges an hourly rate may be a good idea if your needs are basic and you're willing to implement the advice on your own. So if you're just looking for more information on how you can save for your retirement, or an advisor that will recommend certain mutual funds that are likely to provide solid growth for the next few years, this could be a good option for you. Rates can vary between $100 and $300 an hour.
The amount that you will pay depends on:
1.Who you're dealing with.
Advisors that have decades of experience will obviously charge much more than an advisor that has just been certified.
2.What their experience is.
Professionals who have a certain area of specialty are likely to charge you more than one who is a generalist, just like a doctor with a medical specialty makes more money than a general practitioner.
Some will instead charge you a percentage of the total value of your investments. In this case, the advisor will be taking care of managing your investments for you. As they make more money when the value of your investments increases, they have an incentive to make your money grow and avoid losses as much as possible. In this case, the fee is often called an "asset management fee" and it will also vary depending on who you're dealing with and what types of investment vehicles you're using. These fees are usually in the range of 0.5% to 2% per year.
There are also some planners who receive a commission based on the financial products that they sell you. So if they sell you a life insurance policy, for example, they would receive a commission payment for that sale straight from the insurance company. If they sell you mutual funds, they would benefit from the front end sales load. You should be more vigilant in this case to ensure that you're dealing with someone who is actually providing you good advice that will be beneficial to you in the long term and not just a smooth talking sales man. But even those who are paid on commissions have an incentive to sell products that will suit their clients well, as clients who are satisfied with what they got are a lot more likely to come back to them, as opposed to seeking advice somewhere else.
by: JenniferNobles
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