Know How Your Advisor Gets Paid

Know what you are paying for; and know how your advisor gets paid.

Amazingly, studies continue to show that many clients of financial advisors have no idea how they pay for the financial advice they receive. That’s certainly not how we transact with our doctors, lawyers, or contractors, so why is it true in the financial services industry? The root of the confusion could be that financial advisors use so many different compensation models.

To set things straight, it’s first necessary to divide the advising world into three camps.  First, there are advisors who earn their living by commission and therefore may have an incentive to sell you particular products.  Second, there are fee-only financial advisors like Bernhardt Wealth Management that charge clients a percentage of assets under management and operate as fiduciaries who always put the needs of clients first.  And third, there are advisors who utilize fee-based accounts but can also earn commissions on other products they sell.

Calculating fees as a percentage of the assets we manage enables us to operate on a relationship basis, rather than a transactional basis. That is, we get to know each client so that we thoroughly understand their values and goals. We then develop a long-range investment strategy that is true to those values and goals, and systematically review portfolios to ensure our clients stay on course as their circumstances and the markets change.

Further, we seek to add value for clients on a range of financial issues, well beyond managing an investment portfolio. Our fee encompasses a broad suite of personalized services, including tax planning, college planning, insurance planning, retirement planning, estate planning and philanthropic planning.

In all aspects of our relationships, we are motivated by one goal: Do what’s right for each and every client. Our clients know what they pay for our advice and that we will always recommend the course of action that is in their bests interests.

(Note: For a discussion of the six core characteristics--Six Cs--an advisor should have, read What Makes a Great Financial Advisor? and the Six Cs blogs on this topic.)