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Another aspect of evaluating brokers is to ask about their compensation. If broker-dealers or certified planners earn commissions for selling certain products, can they provide unbiased investment advice? For example, the typical commission on a $100,000 variable annuity is $6,000, plus $2,000 in annual expenses, which flow back to the agent, insurer and investment manager.
To better understand brokers’ motivations, examine their registration and compensation. Professionals with “Series 6” registrations, for example, can sell only mutual funds and annuities. They must pass a 100-question, multiple-choice exam for this designation. A much broader registration is “Series 7,” which allows sale of all securities and some insurance products.
Fee-only financial planners, in contrast, do not earn commissions; they may pick products that fit your financial needs and goals, at the lowest possible cost. These planners charge for their time and expertise. …”
This is important for investors to understand!
Tags: Investment Advice, Investment Style, linkedin, NEW