Why is it often so difficult to choose the right financial planner? First, the sheer number of planners makes narrowing the field seem like an overwhelming task. In addition, the variety of designations, affiliations, associations and an alphabet soup of letters following a planner’s name calls for a dictionary to decipher. Once you narrow it down and decide that you would like to employ a financial planner for a fee to help protect your interests, you are then hit by another obstacle:
What is the Difference Between a Fee-Only and Fee-Based Financial Planner?
Fee-Based Financial Planner
- Earns a commission from sales of specific products in addition to the fees that they charge their clients
- Although they are working for their clients, a fee-based financial planner is also motivated to sell these commissioned products to them, creating a potential conflict of interest.
- What is best for the client, may not always be best for the planner and vice versa
Have you ever gone to a doctor, to whom you pay a fee for your visit and while you are waiting in the lobby, you see a pharmaceutical representative walk in with lunch for the office? The nurse brings you back, the doctor examines you, and the visit goes much as it usually does. At the end of the appointment, the doctor writes a prescription for a new drug and assures you that it’s about the same price as the one you are already using and that you won’t see a difference. As you walk out of the office, you bump into the sales rep and notice the logo for the script you just received from your doctor. What has this done to the level of trust you have in this new prescription and your doctor for that matter? A Fee-based financial planner can create the same concerns.
- Receives no commission of any kind based on product sales
- All compensation comes directly from the client, greatly reducing conflicts of interest
- Offer comprehensive, unbiased financial advice based on what is best for each individual client
- Fee-only financial planners who are members of NAPFA are held accountable by that organization’s strict professional and ethical standards
When you are looking to a professional to assist you with your well-being, whether it be medically, financially or otherwise, there is nothing more important than being able to trust the advice. You should always feel as though your doctor or your financial planner is working with your best interest in mind and that you are all working toward the same goal!
At Zynergy Retirement Planning, we do not accept any referral fees, kick-backs, or commissions of any kind. Our goal is to work with you to plan the retirement you have always wanted and to do it in the way that best suits your needs. Set up a free consultation with us today to work with Red Bank’s trusted Fee-Only Certified Financial Planners™.