Fee for Service Fee Structure
Fee for service financial advice is a method of financial planner compensation that provides a very strong incentive for the adviser to give good advice and good service. Strict fee for service advisers do not receive trail commissions or have any automatic ongoing payment from clients, aside from what clients agree to pay them.
If you aren't happy 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. The trouble with disclosure in accordance with the law is that knowing what the adviser is being paid does not tell you anything about the true extent of conflicts of interest.
Disclosure of commissions is only useful when a client is fully informed of what "normal" rates of commissions are. 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. 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.
Many commission paying clients end up paying far larger amounts over many years than they would have otherwise if they had paid a fee for service adviser a realistic amount of money up front. The onus is on the advisor to explain the true cost of advice and to provide a service that delivers to the client at least as much value as is paid for.
Many financial planners have been unwilling to make the move, however at WTC Financial Services, our Certified Financial Advisors have always provided this unbais fee structure.
Our flat fee structure ensures that there is no advisor bias to recommend one product over another. WTC Financial Services “fee-for-service” approach, eliminate the conflicts associated with commission based structures.
We believe that quality advice on appropriate structuring of one’s financial affairs, rather than chasing the highest returns, is the most efficient way forward.
This method of fee structure ensures you pay a fee that represents the value you expect to receive from our services.
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