2nd Nov 2009 by Tom Lindmark
A fee only financial advisor is one who charges you a fee for managing your investment portfolio. Generally, they charge a percentage -- in the range of 0.5% to 2.0% -- of the value of the assets you entrust to them to manage. For example if you have an investment portfolio of say $1 million, they might charge you up to $20,000 per year to manage that portfolio.
Keep in mind that all financial advisors are in business to make money. Nothing wrong with that. Some make their money by selling you investments, a mutual fund for example, that pays them a fee for the sale. Since the mutual fund is in business to make money, they eventually get around to making sure that you pay them in one way or another for the fee they paid the financial advisor. A fee only advisor will not sell you an investment that also pays him or her a fee. They charge you directly in order to make sure that your investment dollars don't end up getting a haircut to pay for fees.
The advantage of fee only is that you know exactly what you are paying. That's not always the case with investments that pay the broker. By the way, that fee is called a load. The only problem you might run into is that fee only advisors usually only work with larger investment portfolios. So if yours isn't large you may be forced to deal with an advisor who gets his fee from the investment company.
Don't let that stop you from investing, just be sure you know how big the fee might be.
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