A Warning On Using Financial Advisors Taking Big Commissions

March 21, 2010 - PRLog -- Commission based financial advisors certainly have their draw backs. When it comes to fee for service for financial advice this is the method that will compensate the advisor the effort that they put in. Fee for service is more transparent; they receive no trailing commissions or any automatic constant payment from clients apart from the billed amount for services provided.

If your not getting the results  with a commission based financial adviser you probably won't deal with him again, but that won't stop him getting his trail commission for as long as you hold your investment.

Advisers in favour of commissions usually argue that there is nothing wrong with commissions as long as they are disclosed properly in accordance with the law. Although now we have laws in place to ensure we see full disclosure of commissions paid, it doesn't rule out financial advisors still having conflict of interest in some investments they offer.

Making sure you get full disclosure on commissions, this means that getting the commission rates including the normal commission rates. It is unreasonable to expect all clients to understand the range of benefits that are available from a wide variety of products and thus clients really have nothing to compare a disclosed commission with.

For the latest information visit the experts http://www.financial-advisor-auckland.co.nz

Unless a client knows what advisers are "supposed" to make, they'll just have to take the adviser's word for it that the commissions being paid are reasonable.

There are only really two ways for a client to be fully informed of the true extent of conflicts of interest. Make sure the advisor provides a thorough document giving extensive statistical data explaining possible and actual commissions on all available products; they must be able to show you real life examples and extremely detailed explanations as to why commissions are justified. The only other alternative is to use the fee for service structure where any commissions, benefits, bonuses are paid back to the client and the advisor charges for the actual services provided.

So make sure you are dealing with a trusted and respected financial advisors. For the latest information visit the experts http://www.financial-advisor-auckland.co.nz


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