Advisory vs. Brokerage Breakdown

Let us be honest, the financial advisory business has not made it easy for prospects and clients to understand what they are paying to receive advice and guidance.

I think that everyone deserves to have the straightforward conversation on cost.

???? Path A:  Advisory

✔ Financial Planning Fee:  this could be a one-time fee to complete a financial plan or it could be an ongoing fee.

⏰ NOTE:   this could appear as a retainer fee, a subscription fee, or an hour fee

✔ Advisory Fee:  this is the fee that clients generally will recite to the question, “how much are you paying for your financial planner?”

⏰ NOTE:   this could be a % of assets managed or a flat fee.

✔ Expense Ratio: It’s important to be aware of these. The expense ratio measures how much of a fund’s assets are used for administrative and other operating expenses.

⚠ Total Advisory Costs = Financial Planning Fee + Advisory Fee + Expense Ratio

???? Path B:  Brokerage

✔ Financial Planning Fee:  I have seen clients pick brokerage products, but still be charged a financial planning fee.

✔ Commissions:  Some brokerage products carry commissions or transaction costs.

✔ Expense Ratios

⚠ Total Brokerage Costs = Financial Planning Fee + Commissions + Expense Ratio

Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.

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