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Advisor Who Doesn’t Charge Fee Is Simply Hiding It Well

Saturday, August 17, 2013 - 11:20 AM
Excerpted from current Q&A AssetBuilder column:

    Q. I'm retiring at year-end and am interviewing financial planners.
       The planner who I'm considering hiring doesn't charge any fees.
       He said that he does not charge a management fee because all the
       vehicles into which they would invest my money have compensation
       for the advisor already built into the product.  This sounds "too
       good to be true."   . . .

    A. The fact that the product compensates him means several things.
       First, that he is primarily a salesman, whatever his business
       card says. Second, that it is highly likely that his recommendations
       will be heavily influenced by the commission schedules of the
       products he has to sell. Third, that it is very likely that the
       number and type of "solutions" he offers are very limited. Fourth,
       that it is a good bet that he primarily sells one or two products
       from a single company.    . . .    When you can’t get clear and
       concrete answers to questions about costs and sales fees, it’s
       time to head for the door.

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4
cumuluscumulus326 posts since
Jan 16, 2010
Rep Points: 1,545
1. Saturday, August 17, 2013 - 11:54 AM
Cumulus:  It is great you have caught on to the shenanigans they pull to convince us we aren't paying commissions for their products.  They act like we are bozos!  They cut off a bit of the interest rate from whatever they are selling you and have other means to get paid.  I had it out with my brokerages for trying to convince me of that junk.  I asked him if he was doing his job for "free".   He finally got mad at me and admitted I was right about how it is done.  Frankly, as long as they still manage to give me a rate I can cope with, I don't care how they do it.  They will always find one way or the other to get paid and I would not expect them to be working for nothing.  
3
paoli2paoli21,364 posts since
Aug 10, 2011
Rep Points: 5,972
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