Independent financial advisors have been working on a sales-based commission model for many years. This means that instead of being paid directly by those who come to them for impartial financial advice, they are given a commission from the financial product provider as a marketing price, with the advice functioning as a secondary consequence of the transaction.
While this offers short-term benefits for cashless consumers seeking financial advice, it poses many problems. Obviously, financial advisors are encouraged to recommend products that will earn them attractive commissions – not necessarily products that are appropriate for their clients. So, choose a financial mentor in Cecil County wisely to get the best benefits.
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This problem culminated in an annuity sale scandal, in which thousands of people resigned from their work pensions rather than advising them to stay. Over time, advisors may charge commissions on the sale of products such as pension funds or equity, as well as "footprint" or recurring commissions for each year the consumer holds the product.
According to the FSA, this commission averages 5.6% of the amount invested. Even if financial advice can be free at the point of sale, it is bound to have an impact on investment returns – and more importantly, the advice given to consumers can never be completely impartial.
However, there is another way. Some financial advisors offer their services for a fee. In other words, instead of charging a commission for every product they offer, they charge a fee for the advice they provide. That is, they receive their compensation regardless of which product their customers choose – and even choose not to buy the product at all.