The Best Fee-Only Financial Advisors (And How to Find Them!)
Updated on Aug 07 2019
There’s no doubt that finding a financial advisor can be stressful. Giving someone such a high level of insight and access into your personal finances can be daunting. With so many factors to consider, one of the most important factors is understanding how your financial advisor is paid. Learn more about why hiring a fee-only financial advisor is one of the best ways to ensure your financial planner has your best interests at heart.
Why You Should Hire a Fee-Only Financial Advisor
Trust is a crucial element in any relationship, and this is especially true for your relationship with your financial planner. You want someone you can trust, someone who puts your best interests first. Fee-only financial advisors are one way to be sure that your financial advisor is doing just that.
In a fee-only model, the only person paying the advisor is the client. The advisor is paid only by clients and does not receive a commission or other payment from an employer or by selling financial products. Fee-based advisors and brokers generally receive commissions or other types of compensation related to selling clients financial products.
Fee-only financial advisors will have fewer conflicts of interest because they do not have an incentive to push certain products. They are focused on providing sound advice, not making sales, and also offer flexible payment models. While fee-only financial advisors are often more expensive than other types of advisors, their advice is more likely to be customized to your financial situation. Most fee-only advisors charge a percentage of the amount of money they manage for each client but some charge by the hour, have a flat fee, or require a retainer.
Finding a Fee-Only Financial Advisor
When it comes to finding a fee-only financial advisor , there are several trusted sources that can help you. The National Association of Personal Financial Advisors(NAPFA) is one of the largest professional organizations of fee-only financial advisors. The website will allow users to search by zip code and/or area of specialization. The Garrett Planning Network is another professional organization of fee-only financial planners. Most planners in this network focus on providing hourly advice.
If you are still unsure how your financial advisor is compensated, ask him or her directly. If your advisor is fee-only, their answer should be simple and transparent. If the answer is convoluted and involves receiving commissions from the sale of financial products, you may find yourself questioning their advice and intentions.
Ultimately, you need to find a financial advisor you can trust with your financial security and your financial future. Ask questions of your advisor, of friends and family or neighbors. Understand their payment structure and be sure that they are holding themselves to the fiduciary standard - putting your interests ahead of their own.
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