Laura Mattia, CFP®, with the Baron Financial Group, comments on the Windfall Elimination Provision (WEP) in The Star Ledger’s Biz Brain column.
1. How are you and your firm compensated?
- Fee-Only? Fee only advisors put their clients interests first and therefore hold a fiduciary standard
- Fee-Based? Fee-based advisors are compensated both by an hourly fee and commissions on some insurance products.
- Commissions? Commissioned advisor’s compensations are directly tied to the type of product that they sell to you.
2. Does anyone in your firm receive compensation from investments that you may recommend?
Receiving compensation from a recommended investment vehicle leaves the possibility for a conflict of interest. That certain investment or insurance product may not fit your needs, but it probably will provide the sales person with a nice sized commission check.
3. Do you receive referral fees from attorneys, accountants, insurance professionals, and mortgage brokers?
It is important when working with a financial advisor that they refer you to professionals that they trust and are competent. If someone gets a free for referring, that may not be the best professional available to you.
4. Are you transparent with your fees and compensation?
Many people believe that their brokers are doing their investments for free. Of course, this is not the case, their fees are just so hidden that it may feel like they are doing it for nothing. It is important to fully understand how your advisor is compensated, and how much they are charging you.
5. Are you a fiduciary?
This is the most important question of all. A fiduciary is legally required to work in your best interests and to disclose any and all conflicts. If your advisor is not a fiduciary, you may need to ask who your advisor is really working for…
To see how Baron Financial Group answers these questions, call us at (1-866-333-6659)
Laura Mattia answers questions in The Star Ledger article “New laws make it tougher for new borrowers to obtain credit.”
James Shagawat offers tips on “Protecting Social Security” in the Fair Lawn Community News.