I was having lunch with a friend a while ago and I’ll never forget when she said that her financial advisor doesn’t charge her anything. I tried to contain my shock and simply said that I’m sure the advisor charges her, and she should probably ask the person how they get paid.
That exchange was a stark illustration of the many ways and advisor can generate fees, many of which suffer from an abundance of complexity and a severe lack of transparency. The video in this post from CNBC has three financial advisors discussing key questions to ask as you search for a financial advisor (or if you already have one, be clear on their positions). The video covers Fiduciary vs. Suitability standards as well as various fee schedules.
For some people, it can be difficult to ask a potential advisor how they get paid, but it is critical for all clients to fully understand the fee structure and if the advisor is getting paid by the products they are offering.