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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Re: Retire rich Date: 11/23/2005 6:01 PM
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Just because someone gets paid an hourly rate for their advice does not mean their advice is any better than someone that gets paid based on the transaction.

It doesn't mean it, but it does mean that their incentives are not in line with yours. Who's more likely to be honest and helpful, who's more likely to give you the pluses and minuses honestly and objectively... someone who gets paid money whether it works out or not, and who gets paid for encouraging you to do things which may not be in your best interest (i.e. move in and out of funds). Or someone who gets paid by you for giving honest advice and the full story and who has absolutely no personal incentive in you doing one thing or the other?

If you think that a commission doesn't influence advice... well, first, you're crazy. And second, look at the lawsuits and settlements against insurance companies and advisors for selling annuities to people who they are entirely inappropriate for.

Now, does this mean that EVERY commission based person is corrupt... of course not, but it does mean that's not the way to play your odds. If you happen to have a relationship with a commission-based broker, and you know enough to make your own decisions and know they've been honest with you, then great.


I don't think anyone should have to pay an ongoing fee unless they need a lot of handholding or have a very complication situation that requires the investments to be adjusted every year.

This doesn't make much sense to me, at least from someone who was just defending commission-based situations. What's the difference for paying a 1% commission from a commission-based broker that averages to $500 on any given year, and paying a $500 annual fee for advice... answer: nothing. Except you know the annual fee guy won't try to trade you in and out of stocks to make himself money.
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