{"id":571586521,"date":"2020-07-01T13:09:00","date_gmt":"2020-07-01T18:09:00","guid":{"rendered":"https:\/\/www.winnipegfreepress.com\/our-communities\/column\/2020\/07\/01\/wwwaskthemoneyladyca"},"modified":"2020-07-01T13:13:04","modified_gmt":"2020-07-01T18:13:04","slug":"wwwaskthemoneyladyca","status":"publish","type":"post","link":"https:\/\/www.winnipegfreepress.com\/our-communities\/column\/2020\/07\/01\/wwwaskthemoneyladyca","title":{"rendered":"How much should adviser’s fees cost?"},"content":{"rendered":"

Dear Money Lady, <\/strong> <\/p>\n

I received a large severance from my employer, which recently eliminated my job after 38 years. I plan to find a financial adviser but because I have never had one before I am wondering what I should agree to pay for these services?
<\/strong><\/p>\n

Ed<\/strong><\/p>\n

\n\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\"Dreamstime.com\nWhile\n\t\t\t\t\t\t\t\t\t<\/a>\n\t\t\t\t\t\t\t\t\t
Dreamstime.com\nWhile The Money Lady offers some sensible guidelines, only you will be able to determine your comfort zone for financial advisers\u2019 fees.<\/figcaption>\n\t\t\t\t\t\t\t\t<\/figure>\n

Dear Ed,<\/strong><\/p>\n

You are not the only one looking around for a new investment adviser. With the volatile stock market environment, many people have sent me comments and questions about how to move their portfolios to a new adviser. I would caution those investors on making any quick changes and selling stock at this time.<\/p>\n

Remember, the key is to maintain a well-diversified portfolio which includes bonds, cash, and high-quality stocks.<\/p>\n

When you are looking for an investment ‘partner,’ try to pick an adviser who really has your best interests at heart — something you will definitely need when weathering future market uncertainties.  <\/p>\n

Please make sure to do your homework and find out what the firm and the new adviser’s value proposition is. It goes without saying that you should interview more than one and make sure you find a good fit with not only the adviser but the brokerage firm.<\/p>\n

Now let’s talk about fees. What should you pay?<\/p>\n

There are two types of fee structures: transactional or fee-based.
Many people use direct investing options these days to avoid high advisers’ fees and we are seeing an increased shift with millennials who simply don’t see the value in having an investment adviser. The young simply don’t want to pay just to sit down with an adviser and have a relationship with a banker. As more funds transfer into the hands of these new investors, advisers and brokerage firms may need to shift their thinking about their future fee structures.<\/p>\n

Many bank financial planners are typically paid a base salary with a commission matrix based on how they grow their book of business and bring on new clients. Fees are preset based on the mutual fund you choose for your portfolio, and range from one to 2.5 per cent. Investment advisers are generally paid straight commission, making them highly motivated to ensure you make a profit. I have seen adviser fee-based services range from .75 per cent all the way up to three per cent. Some advisers act as personal bankers for ultra-rich clients, doing everything for them, hence I can see the higher fee structure. But most of us do not need someone to pay our bills and handle our budgets so, if you are paying more than 1.5 per cent for a fee-based portfolio, you may be paying too much.  <\/p>\n

If you have different, separately managed accounts, your adviser may increase the fee up to 1.8 per cent.<\/p>\n

The bottom line is that fees are all over the map and vary from one adviser to another, and really should be based on your comfort zone. Only you will know what feels comfortable to pay for investment advice. <\/p>\n

Christine Ibbotson is the author of <\/em>How to Retire Debt Free and Wealthy. If you have a money question, please email her through her website at: <\/em>www.askthemoneylady.ca<\/em><\/a>   <\/p>\n

<\/p>

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