Why use a fee only financial planner?

In order to answer this question we need to develop some definitions:

Fee only financial planner:

Fee only financial planners are registered investment advisers with a fiduciary responsibility to act in their clients best interests. They do not accept any fees or compensation based on product sales. Fee only financial planners obtain their livelihood through developing a comprehensive financial plan or through hourly charges.

To hold yourself out as a fee-only adviser, you cannot also sell life insurance, annuities, or any other investment for commission. Fee-only advisers work for their clients and ONLY get paid an hourly rate, a fixed annual retainer or a percentage of the investment assets they manage for their clients.

Fee based or asset based financial planners:

Fees for these investment advisers are based on a percentage of the client’s assets under management, typically 1- 2%. For example, if the client has a portfolio of $100,000 the client would pay $1000 to $2000 per year. If the client has a portfolio of 1 million dollars the fee to the adviser would be $10,000 to $20,000.

Commission based investment advisers:

Commissioned-based advisers earn a commission when you buy or sell an investment. In some circumstances a commission-based account may be cheaper for clients who don’t trade much and don’t need the financial planning services another adviser may offer. For example, a client with just a laddered GIC portfolio that doesn’t do any trading.

So to answer the question: Why use a fee only financial planner?

Fee only advisers have fewer inherent conflicts of interest. For example, they do not sell financial product.

The fee only planner can concentrate on using all six aspects of the financial planning process and often provide more comprehensive advice.

At Next Step, we are fee only financial planners. We honour the skills and abilities of our colleagues who are fee/asset based advisers, accountants, business evaluators, forensic specialists etc. We refer to these trusted colleagues (without referral fees) so that our clients can implement the plan we devise. Comprehensive planning is coupled with the “best of the best” financial products, advice and service.

Let’s have the planning discussion. Give us a call! Acting in your best interest is the promise of Next Step Financial Solutions in partnership with a team of specialized financial advisers!

Want to learn more? Contact Wendy at info@nextstepfs.com

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