Fee-based advisors, who calculate their fees based on asset size, are generally higher suited to individuals with larger assets and money to take a position.
Tam said that in fee-based financial planning, the advisor’s motivation is aligned with that of the client.
“You will not be motivated to do what we call ‘churning your accounts’ or to sell and buy similar mutual funds to earn a commission,” he explained.
Fee-based advisors charge a mean flat rate of 1% and offer holistic advice on tax planning, estate planning and even on a regular basis financial planning in economically uncertain times.
Financial planners who work on a fee-only basis and offer only advice, while rare, are one other strategy to get help along with your funds. This style of planner will review the client’s funds and make recommendations. It is then as much as the client to implement those recommendations.
These advisors only provide guidance and don’t sell investment products, Tam said.
“There is actually a decoupling of advice and sales, which we think is a very positive thing,” he said.
The fee is often charged as a flat rate, Tam added.
