Only a small proportion of financial advisors are Registered Investment Advisors (RIAs). Under federal and state law, RIA must comply with fiduciary standards. Most of the so-called "financial advisors" are considered intermediaries and have a lower standard of care on behalf of their clients.
One of the best ways to assess whether your financial advisor is complying with fiduciary standards is to find out how he or she is receiving compensation. It is now easier to get in touch with a professional advisor via www.edwardjones.com/us-en/financial-advisor/tyler-simonds.
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Here are the most common compensation structures in the financial industry:-
Compensation for costs only: – This model minimizes conflicts of interest. Financial advisors, who pay only fees, bill clients directly for their advice and/or day-to-day management. No other financial reward is provided, directly or indirectly, by any other institution.
Paid financial advisors sell only one thing: their knowledge. Some consultants charge an hourly rate while others charge a flat fee or an annual fee. Some charge an annual percentage based on the assets they manage for you.
Fee-based payment:- This popular form of payment is often mistaken for a fee-only fee, but it varies widely. Accountants receive a portion of their compensation from fees paid by their clients. However, you can also receive compensation in the form of a commission or discount on financial products licensed for sale.
Commission:- A consultant who receives compensation only through commission is faced with a serious conflict of interest. This type of advisor is only paid when a client buys (or sells) a financial product.