The factor of financial advisor compensation plays a vital role in the professional services provided by the financial advisors. These services are very important to decide a number of issues like investment products, investment procedure, proper time of investment and so on.
The investors, in every kind of financial market, need some kind of professional assistance regarding the selection of financial tools. This is a tough process because a number of factors should be considered before the selection and actual investment in the financial products.
Because if the clients lack important data and sometimes the necessary knowledge, the situation becomes more complicated for them. In these situations, the role of the financial advisors is quite important as they can help the clients in taking effective decisions and can also help in making their future secured.
Types of Financial Advisor Compensation
The professional financial advisors offer these services for a definite amount known as financial advisor compensation. These compensations or fees are of different types. The client may pay a certain amount as fees or a certain part of his or her income as commission to the financial advisor.
At the same time, these payments can be done through a combination of fees and commission.
1) Financial Advisor Compensation-Commission Method
The advisors are provided with a commission at a definite rate on the sale of investment products. These financial advisors who provide services for commission often sell the investment products to the clients. In certain cases, the counseling or the advisory sessions are totally free, but the client needs to buy the financial products from the same financial advisor and at that time, the client pays a certain amount as commission. In addition, the financial advisor compensation is also paid in a combination of fees and commission. In the beginning, the client pays for the counseling session and after that, if the client is buying any kind of financial product, he or she also pays the commission for that.
2) Financial Advisor Compensation- Fixed Rate Plan
From another point of view, the financial advisor compensation is also paid as a fixed amount or fees. The amount of this fee is decided by a number of factors. Sometimes the fees are charged for each hour and sometimes these are decided according to the project. At the same time, the advisors can also ask for a certain percentage of income from the client’s asset every year.
Last Updated on : 1st August 2013