Financial Advisor charges

[billy-bob]

I've reached out to an independent Financial Advisor and after bringing up the subject of costs, was told this

I don't charge for my services [...], should you decide to place your business through me, I would be paid by the product producers by way of commission. If you would prefer that I forego commission and you a pay a fee instead, that can be arranged also and agreed in advance.

This sounds to me like he will either push products he's tied to for a better commission or I can pay for a more independent approach? How would I know that he's not charging me AND getting a commission? Does this sound normal?

 

[Conan]

Essentially you have two options:
1. Pay the adviser an upfront fee and then get a non-commission product. This should result in you getting a better value product.
2. You don't pay the adviser a fee, but he gets paid by the product provider. In that case you get a commission based product I.e a less value product.

Either way you have to pay the adviser. It's only a matter whether you pay an additional fee to the advisor or you get a less valuable product because the product provider pays the advisor.

The advisor should be able to show you what impact a commission structure will have on the product, so if you decide to pay a fee you should be able to see that reflected in the product terms. For example in an investment product you should get a higher allocation rate (a higher % being invested).

 

[billy-bob]

Thanks Conan, that makes it very clear

 

[Steven Barrett]

He gets paid by way of commission or fee. Sounds fair enough to me.

Either way, you pay. If you chose to go by commission, you will almost certainly have a higher annual management fee than a nil commission case. This management fee is what pays the adviser. Except it is there for the term of the policy. This may be a significant amount of money over the long term.

How do you know your adviser isn't double billing? You get sent a product specific quote from the provider when the plan is set up and the adviser fees are disclosed in that.

 

[Jim2007]

I've reached out to an independent Financial Advisor and after bringing up the subject of costs, was told this

If an advisor earns his income from anything other than a direct fee from his clients he is not independent in my books it is as simple as that.

Out of interest you should also ask him if he is entitled to any retro fees as a result of your business with him.