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Fee-Only Planner
QFA is a fee-only
financial planning firm committed to assisting client
to reach their financial goals. Fee-only planners,
like us, are compensated solely by fees paid by their
clients and do not accept commissions or compensation
from any other source. As fee-only planners, we
believe there is a significant conflict of interest if
an advisor stands to gain financially from the
purchase of any investment or insurance product he or
she recommends to the client.
What is it?
Why is it better?
Fee-only vs. Fee-based
Standard Payments for
Services
What is it?
Fee-only investment management is the newest and most
attractive way to pay for professional money
management. Many of the top Wall Street firms have
abandoned the commission model and are promoting the
fee only.
Rather than paying
sales commissions for brokers to sell you products you
pay instead a reasonable annual fee, based on your
account value. The fee-only advisor does not charge
commissions.
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Why is
it better?
QFA charges a reasonable, quarterly management fee
based on the value of your account.
The main difference
between a Stockbroker and us is that they make a
living by charging their clients commissions.
Therefore the more they charge the more money they
make.
Stockbrokers often
charge 1% - 2% per trade on stocks, and as much as 6%
on mutual funds. Stockbrokers may also have hidden
charges such as 12b-1 fees or surrender fees on mutual
funds, surrender fees and bloated internal expenses on
annuities, and heavy markups on products like unit
trusts or bonds.
On the other hand, as
a fee-only advisor, our compensation is a flat
percentage of your account value. We do not earn any
money from commissions, trailers, or markups. We earn
money only if your account grows or if we gain new
clients.
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Fee-only vs. Fee-based
Do not be confused or misled! - Fee-only is definitely
not the same as fee-based. Fee-based is a confusing
term for a compensation structure that used to be
called, "fee-plus commission."
Fee-based usually
means that you pay for a plan or other advice and then
pay to buy investments with commissions or markups
that go to the advisor. This can be worse than the
straight commission arrangement because you may pay
twice without realizing it.
Fee-only is what
leading financial writers often recommend. It is more
objective, and without the drag of commissions it has
every reason to have performance as good or better
than the fee-based or commission approaches.
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Standard Payments for Services
There are three basic ways you can pay for investment
help: by the hour, by a set fee or by commissions.
Specific advisory
services such as evaluating your overall financial
needs, developing a comprehensive financial plan or
developing an asset allocation plan are usually billed
on an hourly basis. Fee-only advisors charge either a
set fee for services rendered or a fee, usually 1- 3%,
based on a percentage of the assets under management.
A commissioned advisor gets paid on a per transaction
basis by the companies whose products he or she sells.
For ongoing
management, the type of payment arrangement you have
is important because of the issue of sales pressure.
If an investment advisor is compensated solely by
commissions or is affiliated with a firm that offers
only it’s own proprietary investments, you’ll want to
know the implications of this arrangement and get
assurances that this will not influence decisions made
for your account.
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