Customer Relationship Summary-Beware of added Fees from your Financial Planner
Ask any potential financial planner that you’re considering hiring for a copy of this document. Take it home with you and read it. Better yet, call ahead or find it online before meeting with them. Some who advertise as fee-only will state in their agreement where you STILL might pay additional fees. Here are a few examples: 1) Mutual funds impose additional fees, that’s why you must ask about expense ratios and marketing fees; 2) Assets by a sub-advisor are subject to the sub-advisor in addition to your financial planner’s fees; 3) Transaction fees to an unaffiliated custodian that hold your money.
You will pay these fees and costs whether you make or lose money on your investments.
You must thoroughly understand the pros and cons of the Assets Under Management fee structure. This fee structure is inherently rife with conflict of interests.
Look for a caveat statement on the document: “A conflict of interest exists where an employee could be motivated to increase assets at the firm regardless of the client’s best interest, however, we are required to always act as a fiduciary when working with our clients.” I pulled this statement directly from a firm’s website.*** This is why you must read any document that you are requested to sign. The above statement sounds like double-talk to me. Clarification, in writing, is paramount to a successful and collaborative relationship between you and your planner.
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