You don’t have to be in the ranks of a billionaire or move in the same circles as Warren Buffet, Bill Gates or Donald Trump to have a financial advisor. Anyone who wants to ensure that when they are ready to retire they have a substantial nest egg, and enough money put away in the event of a financial hardship should speak to a financial planner. As prudent as you might have been about saving money through your working years, it is still a savvy move on your part to take the time to consult with a financial advisor to see what magic he or she can work for you and your finances, especially the closer you inch to your “golden years”. If you live in the New Jersey area and are looking for a top financial advisor you should contact John Savadjian. John Savadjian is a highly regarded insurance broker and financial advisor in NJ.
Are financial advisors costly?
Financial advisors, who are sometimes also referred to as certified financial planners, operate with different fee structures: fee-only, fee-based with commission, fee-offset and commission only. A financial advisor who works strictly on commission only, will make his commission based on the various financial products that are sold to you, such as insurance policies or mutual funds, while others may charge a fee and collect commissions on what you buy from them. Other financial advisors choose to charge an hourly rate or flat fee for their services. If a financial advisor charges a set amount, it might be an hourly fee, or a flat fee for a comprehensive plan, or maybe even an annual retainer. If this method is chosen, your financial advisor would likely not earn any commission, in fact, some financial advisors prefer to function as a counselor only and thereby construct a financial plan for you, but he may not necessarily be registered to sell financial products, or may believe it is a conflict of interest to do so. A fee-only financial advisor will give you the benefit of their education, years of expertise and you know up that there is no pressure to purchase financial products and you will know the cost of his serves up front, so there are no surprises after the consultation.
Fee for a financial advisor
Let’s look more closely at the various ways that financial advisors might be charging you for their expertise in lending their guidance toward a more financial secure future for you. How a financial professional is paid just may be a critical factor in how you choose the advisor who is the right fit for you.
There are two ways in which financial professionals are paid:
For a fee-based financial advisor, according to the website of The National Association of Personal Financial Advisors (NAPFA) which is the country’s leading professional association of fee-only financial advisors, the average hourly rate for a financial advisor, based on their professional competency, client-focused financial planning, and fee-only compensation would average from $125.00 to $350.00 per hour, (with a rate scale depending on their expertise and experience). If there is a commission charge, they may request from .5 to 1.25 percent of the assets they are managing. Alternatively, a fee-based financial advisor may charge on a per-project basis or set a flat fee for comprehensive financial plans. A comprehensive financial plan could run between $2,000 to $5,000. Choosing a fee-based financial advisor eliminates any conflict of interest issues as the advisor has no financial products to sell to you which will generate more commissions for him. In fact a credo of NAPFA is that the fiduciary relationship between advisor and client requires that a financial advisor always should put their client’s interests before their own and that they disclose any potential conflict of interest prior to the client making a decision.
For a commission-based financial advisor, your financial advisor is paid commissions for the financial products that he sells. As stated above, many financial advisors choose not to be commission-only practitioners because of the potential conflict of interest, i.e. the advisor may be paid to sell you a product that is not in your best interests.
Your best alternative
In choosing your financial advisor, it should be a good fit. You may be partners in planning your long-term goals and interests for many years to come. Whether you choose a fee-based financial advisor, or one who is paid by commissions, or a combination of both, put the monetary aspect out of your mind and first and foremost, look for an advisor who has the expertise and skills to lead you down a path of financial security into your golden years. Look for such a skilled financial professional in John Savadjian.