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What type of financial advisor should you hire?

Now that you know when to consult a financial advisor, let’s review what type of financial advisor you should hire:

Thankfully, within the arena of financial planners, how the planner is paid actually serves as a valuable tool in helping you make that decision. Yes, it really is that simple. The three types of compensation amongst financial representatives, advisors and planners follow:

  1. Commissionable: earn product commissions, period.
  2. Fee-Based: charge a fee on a written plan (which not so surprisingly often recommends a life insurance or annuity product) PLUS earn commissions on products purchased.
  3. Fee-Only: charge a fee for their advice, period. This fee is typically either a flat annual amount or it is based upon a percentage of the assets they manage for you.

Fee-Only financial planners avoid the direct conflict of interest that the other two pose. Fee-Only financial planners operate under, and are professionally held to, a fiduciary oath of serving the client needs FIRST and foremost.

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