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Financial Advice & Consulting

What is a Financial Advisor?

Fee-Based Advisory Programs: A Different Approach!


If you are like most investors, you find today is investment climate more complex than it was even a few years ago. Let s face it, with more than 8,000 mutual funds to choose from, and a myriad of stocks, bonds, annuities and other investment products available, it s difficult to know where to begin. In addition, developments around the world have created new markets for goods and services, which in turn have generated exciting new investment opportunities.

Using the services of an objective financial professional may be the key to sorting out all of these issues. A financial professional can assist you in building an investment strategy based on your personal goals and tolerance for risk.

Compensating The Financial Professional
An important issue you need to address is how the financial professional is to be compensated for his or her services. Financial professionals may be compensated in a number of ways. These include through commissions derived from the sale of individual financial products, by a set fee for service, or a fee assessed annually based on a percentage of the value of your account. Financial professionals charging a fee based on the value of your account are able to provide these services through programs known as managed money or fee-based advisory programs, which are becoming very popular with today s investors.

Fee-based advisory programs allow a financial professional to offer clients professional portfolio management using stocks, bonds, mutual funds, variable annuities or some combination thereof. The portfolios may be managed by the financial professional and the client using a pre-developed platform, or may be given to a third-party firm to manage. One of the many advantages of fee-based advisory programs is that they allow you to fully utilize the concept of asset allocation. By definition, asset allocation is the apportioning of investable funds among a variety of asset classes with each class reacting differently to similar economic events. The strategy s objective is to offer more opportunities for potential growth in some portion of the portfolio in changing economic environments.

Some additional benefits may be consolidated statements, greater objectivity by your advisor and a higher level of quality service.

You might find that the fee-based approach to managing your personal investment portfolio offers you a more palatable alternative to the traditional commission-based method. If fee-based advisory programs sound interesting

The author is a CLU and ChFC designee, a Registered Investment Advisor and registered representative of Jefferson Pilot Securities Corporation, member NASD, SIPC.

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