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Ed Meek
CEO/Investment Advisor

Edge Portfolio Management

City:Winfield

State: IL



BIOGRAPHY:
At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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How Do Financial Advisors Charge Fees?

Nearly nine-in-ten Millionaire investors consider fees to be a primary factor in choosing an advisor, and of near equal importance as an advisor's honesty and trustworthiness, transparency, and investment track record.

| BY Donald Liebenson

Nearly nine-in-ten Millionaire investors consider fees to be a primary factor in choosing an advisor, and of near equal importance as an advisor’s honesty and trustworthiness, transparency, and investment track record, according to ongoing wealth level research conducted by Spectrem’s Millionaire Corner.  

Millionaires are split over whether they consider financial advisors to be very expensive. Not surprisingly, this attitude is heightened among self-directed Millionaire investors who make all their own investment decisions (73 percent vs. 51 percent of overall Millionaire respondents).

It is important to have a clear understanding of the types of fees a financial advisor charges. “The advisor’s compensation structure can create a conflict of interest between what is best for the client, and what is best for the advisor’s wallet,” observes U.S. News and World Report contributor Roger Wohlner.

There are several ways that financial advisors charge their clients, according to Money Over 55. Among the most common charge is a fee based on a percentage of the client’s assets they manage. This fee can typically range from .5 percent to 2 percent of assets under management. In this scenario, if the account value decreases, the financial advisor makes less money, so there is an incentive to grow assets.

Clients should determine whether financial advisor is fee-only or fee-based. The former does not accept any fees or compensation based on product sales. As a registered investment advisor, they are duty-bound to act in the clients’ best interest. Fee-only advisors can charge a one-time or ongoing fee depending on the types of services they provide. The fees may be hourly, flat or based upon a percentage of assets under management. 

Fee-based advisors may charge both fees and commissions. Typically, a fee-based advisor holds licenses that allow them to sell investments or insurance products for a commission, but operate primarily on a fee-only basis. The potential for confusion underscores the importance of understanding how advisors are compensated (Eight-eight percent of Millionaires self-report that they understand the fee structure they pay to their financial advisor, Millionaire Corner research finds).

Another common way financial advisors charge fees is a commission on financial products sold. A concern with this type of fee is whether this type of compensation might influence their recommendations. A majority of Millionaires express a preference for fees over commissions (55 percent vs. 45 percent). Similarly, twice as many Millionaires said they prefer to be charged a fixed fee for service over a percentage of assets (67 percent vs. 33 percent).

Many advisors charge a combination of fees and commissions, some charge an hourly rate for financial advice, and others charge a flat fee for a specific project, such as creating a retirement plan.



About the Author


Donald Liebenson

dliebenson@millionairecorner.com

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.