"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. "Then I will try to clarify:If a person buys 10K in a fund family as an IRA Rollover, they could pay a few hundred dollars for an hourly rate ever year for advice. They would pay about 1.0%+ for a wrap account but generally those require around 50K or more, or they could pay around $500 once and forget about it.Now if I was sleezy, I could see that the best way to make money in the long run would be to "annuitize" my business by pushing the client into a wrap account or simply paying an annual fee for advice. If I make 1% a year off their money in a wrap, I would make $1000 by year ten. If I get paid based on advice, I would charge around $135 or more for advice would have made $1350 by year ten. If I simply sold them a fund, I would have made a little over $500. I would have to do something sneaky -- and risky, if I wanted to get more money out of that same bucket.The FA that gets paid based on advice is not impact by what fees the client may have to pay. I have worked with a FA for life insurance and certainly respect what they do but I would not use him again as it is simply too expensive for on-going visits -- and I still paid the same fees as if I would have went direct to the life insurance company in the first place.
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