The Best Way to Pay for Financial Advice
My article on Get Rich Slowy:
The Best Way to Pay for Advice:
The Advantages of a Fee-Only Advisor .
It's always gratifying to slam the financial-services industry and have several disagree with you. Check out some of these comments to the article:
1. "Replace 'Prudential' with 'Edward Jones' and you get my story. You’re right: Brokerage firms don’t teach you much about investing."
2. "I completely agree with this post. I work for a large, regional broker/dealer, and while it is not my primary job, I am a licensed broker and manage a few accounts. While I do enjoy this responsibility and want to do my best for my clients, I am bothered by the conflict of interest that comes from being paid by commissions. There is no direct financial incentive to manage the account well. This system promotes excessive trading and the selling of unsuitable products. It has even prevented me from liquidating poor performing positions quickly (like one is supposed to do), because I don’t want it to look like I’m churning the account."
3. "Coming at this issue from the insurance side of things (but a former investment advisor representative myself), I whole heartedly agree with this article. Part of the problem is that in the commission world, even if the advisor you meet with is trustworthy and puts your interests above yours, their perception and capabilities are often crafted by those far above him or her. Conflicts of interest can go far above the head of advisors on the front lines."
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