A fee based financial advisor is a financial advisor who receives their compensation from their investors. This means they do not receive their compensation from a brokerage firm. The investor is their only source. Many individuals like to use the fee based financial advisor because they feel that the loyalty is there more so than if the advisor did not work off of a fee.
As for how the fee is charged when you are choosing a financial advisor, it may be a percentage of the managed assets. If that is the case, the fee may be debited out of your account every investment quarter. You may also be able to pay that fee annually or through other means depending on how that fee is charged to you.
Note, however, that a fee based financial advisor is not the same as a fee only financial advisor. The main difference lies in what investments are loaded into your portfolio.
Financial advisors help you establish financial priorities and then take action on those priorities. During both times when you are prospering and even in turbulent times, a financial advisor advises you on what you need to do to better your situation or maintain it as it is. The main goal is to take the assets that you have and maximize those assets so that you can be financially secure in the future.
Your financial advisor can help you to create a solid financial plan that can involve such things as sending your children to college or your retirement. Fortunately, people of all ages are realizing the benefits of using a financial advisor to help them plan their financial future and this is resulting in more and more people utilizing the services.
As for what you should expect from a financial advisor, you should expect him or her to look at your current financial situation and help you to create goals. A plan will then be created that takes into account all areas of your finances and your overall situation. You'll also be provided with the assistance that you need to implement all aspects of the plan.
It is also taken into consideration that your financial situation is always changing. Emergencies come about, new expected expenses come about, and new goals also present themselves. When this occurs, you simply bring the changes to the attention of your financial advisor and he or she will help you revise your plan.
You now know some of what a fee based advisor will do, but it is also important to know what they don't do. For instance, they don't predict the future. This also means they can't read your mind. They also can't guarantee that an investment will perform well. Although an investment may have a good history, it can have its bad days. This means that they cannot provide you with higher returns than the average annual returns on your investments.
Financial advisors also can't step outside their role as your advisor and act as a therapist. They are there to advise you. This means that they can't snap their fingers and magically make more money appear. They have to help you work with what you already have and what you have access to.
Lastly, a fee based advisor can't protect you from your own financially destructive habits. No advisor despite how they're paid can do this. If you have destructive habits, then it is up to you to decide that you are not going to engage in those habits and stick to the plan that has been established by you and your advisor.
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