When it comes to financial planning, you have got so many choices. The type of financial advisor you choose to hire will depend on your financial management needs. Some people look for simple financial planning solutions, while others are more intricate. That is why having a financial advisor to help and guide you is always a necessity.

When you work with a financial advisor, you will typically pay them through an advisory fee, often based on a percentage of your assets under management (AUM). Other specific fee types are flat fees and hourly fees. Fee-only advisors make money exclusively from these advisory fees. However, fee-based advisors earn money in a variety of other ways in extra to their standard professional rate. 

How Fee-Based Financial Advisors Function?

When you work with a fee-based financial advisor, you will likely agree to pay a fee in exchange for the services they are providing, which probably will be a percentage of your AUM. Some advisors charge a flat rate for all assets, while others use a graduated scale in which the fee percentage decreases as your AUM boosts or increases. Some advisors may skip this altogether and instead charge for a flat or hourly rate. You may also pay a performance-based fee, a predetermined fee you will pay if your assets perform very well.

Methods of Compensation For Fee-Based Advisors

In addition to advisory fees, some of the most common additional income sources for fee-based advisors are the following:

As A Broker-Dealer

Some advisors are also broker-dealers or agents of a firm, in which they can earn brokerage fees for performing trading transactions. They may also sell securities that the firm owns, in which case the firm will make money on the markup.

As An Insurance Agent

Advisors also may sell insurance policies or other insurance products and earn a commission from the insurance company.

From Mutual Fund Companies

Some advisors may acquire a commission from the mutual fund company for investing your money in that fund.

DocuPrep Xpress: Your Reliable and Trustworthy Financial Advisor

Here at DocuPrep Xpress, our fee-based rate is priced competitively and puts all your needs first, above all else. Rest assured that we charge only at the value of your portfolio, with guaranteed no hidden charges. Contact us today to learn more about how we can help you navigate all your financial management needs, also other services, such as the Getting Out of Default and the Student forgiveness program.