Are Financial Advisors Paid by Mutual Funds?
Are financial advisors paid by mutual funds? The answer is typically, yes. When an advisor recommends a mutual fund, that advisor will most likely get paid a recurring fee that goes from 0.25% to 1% per year. In addition, advisors that work on commission often will also get paid a percentage on the initial sale of a mutual fund, which is usually in the range of 1.25%- 2%. There are some exceptions where some firms will charge a flat management fee, in addition to also collecting the back-end fund fees, paid directly to the advisor. Here are ways to get away from these fees:
Don’t use Mutual Funds
The best asset managers walked away from mutual funds long ago, especially because they are tax inefficient. Most of them are now using exchange-traded funds (ETFs), which don’t pay a commission to the advisor.
Look for a Fee-only Wealth Management Firm
At Wiser Wealth Management, we don’t use mutual funds. But most importantly, we would never use a mutual fund that paid us. If you’d like to avoid those fees, get in touch with a fee-only fiduciary wealth management firm, such as ours. This will remove any conflicts of interest and allow you to receive a better return on your investments.
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Casey Smith
President, Wiser Wealth Management
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