Fee-based advisors, who charge based on asset size, typically work better for people with more assets and dollars to invest.
Tam said fee-based financial planning aligns the motivation of an advisor with the client.
“They’re not going to be motivated to do what we call churning your accounts, or selling and buying similar mutual funds, so they can make a commission,” he explained.
On average, fee-based planners charge a flat rate of 1% and provide holistic advice such as tax planning, estate planning or even everyday financial planning during uncertain economic times.
While uncommon, fee-only, advice-only financial planners are another way to seek help with your money. This type of planner reviews the client’s finances and makes recommendations. It’s then left up to the client to implement those recommendations.
These advisors simply provide guidance and do not sell investment products, Tam said.
“It truly is a decoupling of advice versus sales, which we think is a very positive thing,” he said.
The fee is typically charged at a flat rate, Tam added.
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