Advisory Fee or Commission?

I want my clients to fully understand the types of financial services I provide. The bulk of my business is conducted under a fee-based structure, which I prefer. Some types of business are not available in that structure, and earn me commission.

If you have any question about what type of business I am discussing with you, please ask!

Fee-Based Advisory business

This accounts for most of my business revenue. In this capacity I am supervised by Cambridge RIA and am held to the standard of acting in my clients’ best interests.

  1. Financial Planning – an upfront fee, varying from $1000 – $4000
  2. Investment Management – an annual fee (see attached for fee schedule) broken down into components that account for Cambridge’s fee for supervision and service, a portfolio manager fee (as applicable) and my fee.
    1. Advisor-Managed Models
    2. Custom Advisor-Managed Portfolios
    3. Outside Portfolio Managers
      1. Frontier Portfolios – Managed by Frontier Asset Mgmt
      2. Occasionally other managers, including many on the CAAP platform – my fee remains the same, theirs varies

 Commission Business

This is a smaller part of my business revenue – it is a good fit when there is not an appropriate fee-based option. In this capacity I am held to the standard of making suitable recommendations. These products (insurance products and mutual funds) have built-in commissions that are paid to me by the company involved, rather than as a disclosed fee. Some examples of this business are:

  1. Insurance sales – Life, Long-term care, and disability insurance
  2. Some annuities – Fixed and variable annuities that are the best fit for the client but are not available in a fee-based structure.
  3. Brokerage investment accounts – I still have some old accounts that are not fee-based and provide commissions to my business. I rarely open new accounts of this type, unless there is a clear need.

Please see Attachment: Cambridge publication “Understanding the Differences between Commissionable and Advisory Accounts”