Chris Worby, a reputable financial advisor and provider of Wealth Management services in Regina, is a trusted professional with more than two decades of expertise. Worby Wealth Management caters to individuals, families, and business owners in the Regina area, and we deliver exceptional financial and wealth management services. The team at Worby Wealth Management is attentive, crafting personalized financial plans to meet clients’ unique needs. Chris Worby has been licensed since 2001, and he’s watched a lot change in how advisors get paid. One question he still hears often is what fee-based actually means, and how it’s different from fee-only. Here’s his breakdown of the terms, and why the way he gets paid matters more than people realize.
Advisory fees: what does fee-based mean anyway?
Having been licensed since 2001, I have seen a number of things come and go in terms of how advisors make money in our industry. One that I’m happy to see mostly gone is commissions. They still exist in some investment houses but I think clients are best served outside of a commission setting.
Today though, we have a bit of a misunderstanding between a couple of terms. ‘Fee-based’ and ‘Fee-only’ being two of them.
Fee-based does allow for some commissions. Some products do generate a commission but the bulk is probably taking a fee based on an hourly rate or assets under administration -also known as AUM. But there is still a potential for commissions to be generated by the investment chosen.
Fee-only means there will be no other income generated outside of the agreed upon fee.This is my preferred way of operating as it leads to less conflict of interest. Since no product pays me more than any other, my recommendation is for the best solution I can see. I also like that it’s easy and we can all understand it.
One area for misunderstanding is how the fee is calculated. Some advisors will charge a flat fee for a financial plan or an hourly rate – this is the exception though. Most advisors will charge a percentage of assets under administration. This is the method that I follow and it fits quite well. It also aligns our interests – if I get paid more based on more assets, I want my clients assets to turn into more assets! And if it can be done with less volatility that also suits me very well.
My final thought on fees is quite simple – they are worth the investment. Investing is complex and there are a lot of moving parts and a lot of opportunities of which the average investor is not aware. Taxes are complicated and maximizing a portfolio is hard to know how to do. Find a professional you trust and work with them. I know it’s self serving but there is academic work showing that investors with advisors outperform those without. We are professionals who care about our client outcomes but are also just separated enough emotionally to give advice when it is needed.
REGINA FINANCIAL ADVISOR Your Can TRUST Chris Worby from Worby Wealth Management helps you live your dream!
