Paying for financial advice can prove difficult for many people, especially when you do not know where to go for the guidance you need. Not all advisors offer the same information, and some focus on helping business owners rather than the average person. Three professionals from the financial world got together to discuss just which financial services you should pay for and when. Use their advice to help decide where to turn when you need to.
Buying and Selling Stocks
When your goal is to buy or sell stocks, you want to speak with a financial advisor who understands the process. Mr. Ordean, a professor of finance at the Haas School of Business, says you can either pay a commission fee or a yearly percentage. The yearly percentage varies based on the amount of assets under management, but is typically only a small percent of the total.
Investing in Mutual Funds and ETFs
Index funds offer a passive investment strategy, according to Ms. Schoar, a professor of entrepreneurial finance. There is not usually much advice for them, as they are typically pre-selected options to choose from. The advice comes after when investors need to pay for tax advice with the funds included.
Advice By the Hour
Mr. Hauptman, a financial services counselor, discusses how some investors prefer to get their advice by the hour. Sessions include simple discussions about your finances and where you are looking to invest. You can spend an hour or two talking things through and receiving guidance on the best deals. If you want to go ahead with an investment, you can then pay a percentage or commission fee for the additional services. If not, you can walk away with the advice to do with it what you will.
Not all financial advisors have your best interest in mind. Advice by the hour may seem like a great idea, but it may not be if the advisor has an incentive to meet from his company. He might push you to invest with him simply so he can get the sale. On the other hand, an advisor who requires a percentage fee may have similar incentives. He may encourage you to invest in a particular stock or fund even if you really shouldn’t.
You need to take precautions when seeking financial advice so you don’t end up working with someone who does support your ideas. There is advice you will want to pay for, but choose carefully when it comes to who you work with.