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Learn how your advisor is paid and how their firm is compensated.
Your investment advisor’s firm is compensated for the services it provides through fees and charges.
What you pay will take away from your returns, so you need to know what the fees and other charges are, what you’ll get for them, and how you will pay.
How Your Advisor is Paid
- If your registered investment advisor earns a salary, then the cost of their compensation is built into the products you buy.
- Some investment advisors charge a fee, or commission, for each trade.
- If your investment advisor sells mutual funds, their firm may have additional fees and charges. Some mutual fund charges are built into the cost of the product. Be sure to ask about these charges and take the time to understand them before you invest.
- Portfolio managers, and many advisors at full-service firms who work with higher net worth investors, charge a fee based on a percentage of the portfolio’s value. The time to negotiate this fee is at the beginning of the client-advisor relationship.
- Advisors who charge an hourly rate, like fee-for-service financial planners, may or may not be licensed to sell investment products. Be sure to check to see if they are registered.
Whatever the case, it’s your right to know the fees and other charges you might have to pay. Remember to factor all fees and other charges into your calculation of return.
Visit our Fees & Charges page for more information on some of the common fees you pay.
Know the Cost of Your Registered Investment Advisor
Watch this video to learn about the Charges and Compensation Report that you receive from your investment advisor’s firm.