Adviser Compensation and Conflicts of Interest
Do you know how your current adviser or financial planner gets paid? Why would adviser compensation even be important to you?
If an adviser gets any payment from a mutual fund company, brokerage firm, insurance company, etc., then you should ask yourself who exactly is the adviser working for. Why does this matter to you and your financial life? Either the adviser works for you or for the mutual fund or insurance company, etc., that’s paying them; one cannot serve two masters. At ColeFP, we work for you because that is where 100% of our compensation comes from.
This is not to suggest that all advisors who are commission or sales based are crooks because that simply isn’t the case. If your commission-based advisor is willing to provide a binding, written, fiduciary pledge to you, guaranteeing that they will act only in your best interest, great. They should also be willing to disclose all sources of their compensation to you and any conflicts of interest they can identify.
Ultimately it’s up to you to follow the money and know how they’re paid and what it might imply. It's up to you to know whether or not they have a fiduciary duty to you. Ask questions and insist on answers so you can go into these decisions with your eyes open and educated.