There are always two sides to a coin, right? That’s why some financial advisors will give you the best pieces of advice, while others will lead you down a slippery slope. What’s the difference between the two?
Well, those leading you astray work on commission. The more clients they have a sit down with, the more money they earn. Additionally, the more financial products they get you to buy, the better for them. In a way, it’s more about them than it is about you and your finances.
Never in a Rush
But then there’s the other kind of financial advisor – the fee-only type. For this one, you’ll either have to have them on retainer, pay them hourly, or you can opt for the asset under management route. Either way, the point is that they are never in a rush to help you with your financial goals.
They are never in a rush to help you with your financial goals
For one, they have no divided loyalties. Since they’re paid a flat fee, they are not looking out for themselves when meeting with you. They know that they are already well compensated for the session(s), and as such, everything can then be about you.
Taylor Schulte, a fee-only financial expert who hosts a podcast for retirees, says that instead of selling products to their clients, they sell advice. And coupled with the fact that they can only receive compensation from the client alone, why not give them value for their money?
The other positive thing about these fee-only experts is that the client gets to know exactly how much they are paying for services rendered. With those working on commission, you have no idea of the huge under-the-radar payments they’re making, and that’s a disservice to you as a client.
You may be good with money, managing your finances and all by yourself, but a little professional help never hurt anyone, right? With a fee-only expert, they get to double-check your math with no hidden agenda. They can identify blind spots that you may have overlooked, and isn’t that a step in the right direction?
They can identify blind spots you may have overlooked
When you have someone on retainer, they most definitely are knowledgeable about all aspects of your finances, not just your investments. As such, they are in a better position to advice you on a whole lot more, as opposed to those others who will only be about your investment moves.
Underutilized Service
Roger Whitney, a financial expert who also hosts a retirement podcast, agrees with all this. Beginning with having professional help with your math, he says that most clients underutilize this service. They feel confident enough to not have anyone potentially second guess their money moves, and in the event of something wrong happening, they are left with no one else to blame but themselves.
Concerning the holistic approach that a fee-only planner brings, Whitney says that they definitely have more experience when it comes to non-investment finances. They can help you plan on cash flow, setting financial goals, et cetera.
They are legally required to act in your best interests
And while everything thus far shows just how beneficial it is to have these financial advisors, nothing comes close to the fact that they have a fiduciary duty. You don’t know what that is? Rest easy then – it is the legal responsibility for these experts to act in the best interests of their client, no matter the circumstances. What could be better than that?
