Understand Financial Planner Commission Structures

When you decide to work with a financial planner of any certification, it’s important to know how they are paid. When you understand how they are paid, you better understand their motivations for recommending particular products. The three most common payment structures are: fee-only, fee-based, and commission-based.

Fee-Only planners don’t get a commission, they are paid based on the advice they give and not the products they get you to buy.

Fee-based planners will receive commission on some of the financial products they sell but mostly they are paid out of the fee you pay for their advice.

Commission-based planners are paid entirely based on the products they get you to buy.

Obviously, the closer to the fee-only side of the spectrum you can get, the better. That’s not to say all commission-based planners are bad, but you can see how they may be biased.

Related Posts:

• Excess Capital Loss Rules
• How To Ladder CDs