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.
- Financial Planning – an upfront fee, typically $2500, but can vary based on complexity.
- 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.
- Advisor-Managed Models
- Custom Advisor-Managed Portfolios
- Outside Portfolio Managers
- Frontier Portfolios – Managed by Frontier Asset Mgmt
- Occasionally other managers, including many on the CAAP platform – my fee remains the same, theirs varies
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:
- Insurance sales – Life, Long-term care, and disability insurance
- Some annuities – Fixed and variable annuities that are the best fit for the client but are not available in a fee-based structure.
- 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”