Financial Planning Program
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Financial advising careers are expected to be one of the faster-growing occupations over the next decade, with a projected growth rate of 30 percent between 2010 and 2020, according to the Bureau of Labor Statistics. At the same time, a substantial number of baby boomers, who anticipate retirement, add a great demand for financial advice.
Listed below are compensation methods used in the industry. Choosing the appropriate method depends on your individual situation and personal preference.
Commission only: Advisors who receive only commissions for selling financial services products, such as investments, real estate, insurance products, or loans. There is no charge for the advisors advice or preparation of a financial plan.
Employers would include: Edward Jones, American Family, and State Farm.
- Commission and fees: Advisors may receive a fee for developing a financial plan for a client then receive commission on the financial products recommended in their financial plan. This is a very misunderstood compensation method confused with fee-based. This is the most popular form of compensation for advisors and planners.
Employers would include: Ameriprise, AIG Financial Advisors, and UBS.
Salary plus bonuses: This compensation method is mostly used by banks and brokerage firms who pay employees a base salary plus incentive pay based on the number of clients they bring to the firm or by selling certain products and services over other options.
- Fee-Only: Fee-only financial advisors are either registered investment advisors (RIA) or associated with an RIA firm. Fee-only advisors have a fiduciary responsibility to act in the clients’ best interest, meaning they do not accept compensation based on the sale of products. Fee-only advisors typically have fewer conflicts of interest, and they provide more comprehensive financial planning advice through recommendations. There are three ways a fee-only advisor can charge their client: hourly fee, flat fee, or retainer fee.