Miscellaneous
When I worked as a Wall Street investment adviser back in the 80s, there was basically only one way we got paid: commissions. When I bought or sold shares of stock, the client paid about 1% of the value of the trade. When I sold an annuity, I got paid 4%. When I sold a mutual fund, the commission was anywhere from 2 to 7%. So back then, advisers made a living by taking a slice out of whatever money you invest. And for many, that's still true today. That system, however, isn't the best. For one thing, advisers get paid more for some investments than others, which can influence their advice. Another issue: While the best way to manage money is often to sit tight and do nothing, your adviser can't pay their mortgage unless your money is moving. It was flaws like these, along with the desire to create a steady, predictable adviser income, that years ago led to a new model: Instead of charging per transaction, charging a set percentage, typically around 1%, of the assets under management. Got a hundred grand? Pay $1,000 a year. A million? 10 thousand. But that system isn't ideal either. For example, does managing a million really require 10 times the effort of managing $100,000? And if the stock market doubles, does that warrant a 100% raise for your adviser? A final way of paying for advice has also gained in popularity: paying by the hour, just as you do with an accountant or lawyer. The problem? As with an accountant or lawyer, hourly rates can be high. So, what's an investor to do? Want more information? Check out these resources: Ask Stacy: Do I Need a Financial Adviser, or Can I Manage My Money Myself? 6 Signs Your Financial Advisor Could Be Ripping You Off 5 Questions to Ask Before Hiring a Financial Adviser How to Find the Right Financial Adviser US News: What to Know About Advisor Fees and Costs US News: How to Find a Financial Advisor if You're Not Rich SmartAsset: How Much Does a Financial Advisor Cost? Investopedia: How to Cut Financial Advisor Expenses Dave Ramsey: How Does a Financial Advisor Get Paid? Should You Use One? Money Under 30: When Is It Time To Hire A Financial Advisor? Forbes: Do I Need A Financial Advisor Or Should I Do It Myself? Here's When It's Worth It To Get A Financial Advisor. The Balance: How to Evaluate the Cost of Hiring a Financial Planner Nerdwallet: How Much Does a Financial Advisor Cost? The Balance: Is It Worth the Money to Hire a Financial Advisor? Money Talks News' savings account search tool Subscribe to the Money Talks News newsletter Take our course The Only Retirement Guide You'll Ever Need Take our course Money Made Simple Miranda Marquit's website Wealthramp: Pam Kruger's website Become a member: https://www.moneytalksnews.com/members/ See omnystudio.com/listener for privacy information.