Quote of the Week: Commission versus Fee Planners

As our clients know, we provide investment management and financial planning services on a fee-only basis.  We always have, and we always will. That’s because we believe that selling investments on a commission basis represents an inherent conflict of interest between what’s best for you, and what’s best for the advisor.  Since we work on a fee-only basis, our interests and your interests are always aligned. We’re not the only ones to see the problems with commission and fee-based (e.g. fee and commission) advisors. For a similar perspective on this important issue, see the comments below by advisor Allan Roth that appeared in AARP’s national magazine:


“Obviously, a planner who works on commission would want to sell you products that yield the highest commission — typically, load-carrying mutual funds, hedge funds, private investments and a host of insurance investments, ranging from annuities to universal life.

A commissioned planner at a big financial firm like Merrill Lynch, Wells Fargo Advisors or MorganStanley SmithBarney might also be under pressure to make a sales quota or to sell particular investment products the firm wants to sell, whether or not they’re the best investment for you. But the conflict of interest is particularly stark in the commission business.

When your planner recommends an investment, ask if there’s a penalty for getting your money back. If so, ask how much it is and how long the penalty period lasts. Penalties are the best indicator that your planner is getting a big commission.”

Allan Roth, “The Two Faces of Your Financial Planner,”  AARP The Magazine,  March 23, 2012

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!


No comments yet.

Leave a Reply