Saving Money By Not Paying Commissions

Last week I wrote about the importance of receiving advice from a professional without conflicts of interest– putting the client’s best interest first. Today I’d like to focus on the scenarios in this capacity that can save you money.

No Sales Commissions

Without a Sales Commission… 

When working with a financial planner that doesn’t earn a sales commission, their only form of compensation is the fee you pay for their service. There are several ways to pay, but the two most common are paying an hourly rate for service rendered or at an annual rate based on your net worth or investment balances. This is how clients pay for advice at Callahan Financial Planning.

With a Sales Commission…

Alternatively, the more traditional and much more common way to receive financial advice is via the purchase of financial products. This can be almost anything, but it includes stocks, bonds, bank accounts, mutual funds, ETFs, annuities, insurance policies and much more. If you have any investment accounts, IRA’s, 401ks or other retirement plans that involved a financial agent, financial adviser or consultant you paid them a commission. Put another way, if you’ve done any of these things with a bank, most credit unions, a full-service brokerage or insurance agency you’ve paid a commission.

Because these commissions can be quite high and often continue until action is taken by an account holder, it is important to know how this may apply to you. We have assembled a list of some of the most common here.

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Author: Reuben Brauer, CFP®

Reuben is Vice President of Financial Planning and is a Certified Financial Planner™ practitioner serving clients in Denver, CO, Omaha and Lincoln, NE, and San Francisco, Mill Valley and San Rafael, CA.