“I think our financial advisors are overcharging us.” But how can we know for sure?

Financial Advisors


question: I think our financial advisor is overcharging us. what should we do

answer: First and foremost, the first step you should take to ensure you are paying a fair fee is to understand your advisor’s fee structure. “For a fee or for a fee?” Although these terms are similar, they are actually opposites. Fee-only advisors charge a flat fee or a percentage of the assets they manage and receive no commission for selling products or investments,” said Allison James, Certified Financial Planner at Worthwise Financial Partners. say. This helps ensure that these advisors work in the best interest of our clients.

Looking for a new financial advisor? Use this tool to match you with financial advisors who may meet your needs.

Paid advisors, on the other hand, receive commissions from selling products and recommending investments in addition to the commissions paid by users. This may create a conflict of interest.


How do I find out my advisor’s compensation?

You can always ask a question and they will help you, but if for some reason you don’t get an answer, don’t worry. “You can get an idea of ​​the structure by looking at the fee schedule on the website and the Form ADV Part 2 that you have to submit each year,” he says.

Having trouble with your financial advisor or looking for a new advisor? Email your questions to picks@marketwatch.com.

You’ll probably need to call your advisor to find out what the problem is. “If you feel that you are not receiving value for your money, the best place to start is with an advisor to understand what services your money will be used for. If it feels too expensive, start looking for a new advisor who can provide the value you’re looking for,” says Zach Hubbard, certified financial planner at GreenSpring Advisors. (Looking for a new financial advisor? Use this tool to match you with financial advisors that may meet your needs.)

And look beyond just high-level costs. “Whether they are currently engaged with a professional or seeking advice in the first place, I encourage consumers who use financial advice to know who is being paid by whom and for what. We frequently advise to be clear: Client costs are not limited to commissions and advisory fees, but also include the costs of trading securities and management fees for mutual funds and exchange traded funds (ETFs). Investors need to be aware and understand how these costs affect the bottom line of their investment,” said David Morris, certified financial planner at the Worthwhile Wealth Council.

How much do most advisors charge?

It’s hard to know if you’ve been overcharged if you don’t know how much you’re paying your advisor. “If you have a fee-only or fee-only relationship with your advisor, the standard is usually about 1% of the assets that the advisor manages. Some advisors charge more, others less. , around 1%, that’s good,” says Joe Favorito, certified financial planner at Landmark Wealth Management.

If your advisor charges by the hour, you can expect to pay between $150 and $300 per hour, but if you work with an advisor who charges a flat rate, it typically depends on the level of complexity of the project. between $1,000 and $3,000, Favorito said. . However, be sure to negotiate the price.

Looking for a new financial advisor? Use this tool to match you with financial advisors who may meet your needs.

While you shouldn’t necessarily choose the lowest rate advisor, Alexis Hongammen, certified financial planner at Total Financial Planning, says it’s important to shop around to find the best value for yourself. “Reach out to friends who use advisors and see what they get for what they pay. They may pay less, but get less in return. The reassurance you have with your advisor is also of immeasurable value: if you feel very comfortable and can trust their recommendations, you can meet new people who might not be a good fit for the low price. Rather than just getting started, some value has to be taken into account,” Honggamen says.

Keep in mind that 2022 will be a terrible year for the market and it is not advisable to base Advisor performance on that single year. To clarify your specific situation, you can always ask your advisor questions such as: Is it high risk, medium risk or low risk? Who are these investments best suited for? How has my portfolio performed compared to benchmarks since 2022 and January 1, 2020? says Tara Amberzakt, Certified Financial Planner at South Bay Financial Partners. Marianela Corrado, a certified financial planner at Tobias Financial, says each asset class should be considered against specific benchmarks. She is “large-cap compared to the S&P 500 and small-cap compared to the Russell 2000,” Corrado says.

How to choose a new advisor

If you have specific concerns about your portfolio, it’s always wise to get a second opinion. Here are 15 questions to ask before hiring an advisor. “The National Association of Personal Financial Advisors (NAPFA) website and the CFP site will help you find a paid financial advisor or fiduciary that meets your needs,” Advice Financial accreditation Financial planner Alonso Rodrigue Segara said. Use this tool to match with your financial advisor.


Having trouble with your financial advisor or looking for a new advisor? Email your questions to picks@marketwatch.com.



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