You should expect any prospective advisor to be transparent about their cost structure. This includes disclosing which services are covered under an advisory fee.
Financial advisors, also known as wealth advisors or wealth managers, charge for their services in a variety of ways. As a result, comparing different fees or commissions can be tricky.
When shopping around, make sure a prospective advisory firm is upfront and transparent about asset management fee structure. This includes disclosing which services are covered under the specific agreement. Advisors should also tell you whether they receive a commission—and how much—based on their recommendations of certain products or services.
In addition, some wealth management firms have broader service offerings compared with other advisors, which can mean a higher value-to-cost advantage for you.
Here are some of the costs you’re likely to encounter when comparing prospective advisors and the associated fees for your investments:
It’s important to understand the total cost you pay for the services or value you receive. As part of your research, ask whether a wealth manager is willing to negotiate on the asset management fee structure to deliver more value for what you pay. For example, a relatively large wealth management firm that has offices in several states is often able to negotiate with vendors to bring down operational costs so that your expense ratios and custodial fees can be lower.
Once you have a clear picture of how various advisors and firms are paid for their services and expertise, you’ll have a better understanding to evaluate the options and hire an advisor with confidence.
Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.