I’ve been with the same full-service brokerage for many years. My adviser recently informed me that they are transitioning to a fee-based service from what has historically been a commission-based service. I rarely seek the advice of my adviser, and consequently he doesn’t make a lot of money from me. The prospect of paying more than $1,000 per month for services that I do not fully utilize is a bitter pill to swallow.
For advisers, fee-based compensation has several advantages. It provides a more predictable revenue stream, and it reduces the amount of time the adviser spends recommending transactions to clients to generate commissions. This frees up the adviser to build his or her practice by bringing in more business and offering a broader menu of services. Fee-based compensation also reduces the potential for abuses such as account churning.
He suggests that you contact the adviser to determine if the commission-based option is being removed entirely. If it is, he recommends that you contact the branch manager and explain that you would strongly prefer to remain on a commission basis and ask if there are other advisers in the office that offer that option. If it’s a hard “no,” you could then ask a few friends or associates if they know of an adviser who might suit your needs, Mr. Cable said.
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