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About This Episode
Fee-only vs. fee-based financial advisers is a crucial topic for anyone looking to make informed decisions about their financial future. Understanding the distinct differences between the two types of advisers can help you choose the right professional to manage your investments and support your financial goals.
In this episode of GDS Unplugged, Glen and Robert dive deep into the distinctions of fee-only and fee-based advisers, what the major differences are, issues and red flags to look out for, and how to determine what is best for you.
Whether you’re a financial expert or just starting your investment journey, you’ll find valuable insights that can help you make sense of your present and plan for your future.
What is the Difference Between Fee-Only and Fee-Based Advisers?
Fee-only advisers are compensated solely by their clients, typically through a flat fee or a percentage of assets under management (AUM). They do not receive commissions, kickbacks, or incentives from third parties. This model promotes transparency and aligns the adviser's interests with those of the client.
Fee-based advisers, on the other hand, may charge clients a fee but also earn commissions from selling financial products, including proprietary or commissionable products. Fee-based advisers may receive both client fees and commissions, which can create potential conflicts of interest.
Understanding Fee-Only vs. Fee-Based Advisers:
Whether you're planning for retirement, managing your investments, or seeking financial advice, this episode provides the insights that can support informed financial planning decisions.
Benefits of Fee-Only Advisers:
- Transparency: Clients know exactly how their adviser is compensated, with no hidden incentives.
- Fiduciary Standard: Fee-only advisers who are registered investment advisers are legally required to act in their clients’ best interest. This includes providing advice tailored to the client’s objectives and disclosing material conflicts of interest. Ongoing monitoring of accounts is only provided when specifically agreed upon as part of the advisory relationship.
Factors to Consider When Looking for a Financial Adviser:
- Compensation Structure: Understand how your adviser is compensated and the potential conflicts of interest that may arise.
- Standards of Care: Fee-only advisers adhere to the fiduciary standard, while fee-based advisers operate under the suitability standard, which may not always prioritize the client's best interest.
- Long-Term Impact: Even small differences in fees can significantly affect investment returns over time.
Ethical Considerations:
- Many advisers face ethical dilemmas in fee-based environments, being pressured to sell products that may not be in the client’s best interest.
- Advisers who transition to fee-only, like Glen and Robert, often cite personal values, family influence, and a desire to “sleep well at night” as reasons for the shift.
Don’t Settle for Unclear Advice:
Choosing the right financial adviser is an important decision that can have a meaningful impact on your financial future. Understanding the difference between fee-only fiduciaries and fee-based advisers is a valuable first step toward protecting your investments and aligning your financial goals with your values. Tune in to Episode 4 of GDS Unplugged and gain greater clarity and confidence as you navigate your financial journey.
Resources:
Ready to take your learning to the next step?
- Connect with Glen Smith and Robert Casey on LinkedIn.
- Learn more from GDS about Fee Only vs. Fee Based Advisers.
- Subscribe to our YouTube channel.
- Contact GDS Wealth Management for a complimentary financial consultation.
- Submit your questions to Glen and Robert’s GDS Unplugged mailbag by emailing gds@gdswealth.com.
Why Listen?
This episode is packed with valuable information and practical advice for anyone considering the differences between fee-only and fee-based financial advisers.
Tune in to gain a deeper understanding of these two types of advisers and how they can impact your financial future. Don't miss out on this opportunity to enhance your knowledge and take control of your financial planning.
GDS Wealth Management (“GDS”) is an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. The information presented in this podcast is intended for general informational purposes only and does not constitute investment, legal, or tax advice, or as a recommendation to buy or sell any financial product. Any references to specific investment strategies, financial products, or institutions are not intended as an endorsement or recommendation. The views and opinions reflect the authors as of the publication date and are subject to change without notice. Past performance of any investment strategy is not indicative of future results. All investments involve risk, including the potential loss of principal. This podcast does not guarantee any specific financial outcome or result from the implementation of any strategies discussed. For more information about GDS Wealth Management, including a description of services, fees, and important disclosures, please visit https://www.gdswealth.com.
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