Payment
How your broker gets paid is not always obvious, so be
sure to ask. The following are the most common means of
compensation:
Commission
The advisor gets a percentage of the “sale.” It’s
not unusual for these advisors to be more concerned with
their bottom line than with yours. However, they will give
you as much time as you need if they feel the time will
result in a sale.
Retainer
Annual retainer fees typically range from $1,500 to $3,000
and are billed quarterly. This is an expensive route, but
you are then free to seek as much advice and support as
you’d like--kind of like using an HMO for medical care.
Hourly Fee
Hourly fees can run anywhere from $100 to $300 and more.
The advantage is that you only pay for services as needed.
However, hourly fees may discourage you from seeking advice
as frequently as you might like.
Assets Under Management
Some advisors charge a fee based on a percentage of your
assets under their management. These fees commonly run from
0.5% to 1.0% of your invested assets. This is a fairly equitable
arrangement if you’re the type of investor who needs
a lot of attention and TLC.
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