The general public deserves to have compensation of "Financial Folks" disclosed to them. The general public also deserves to have all of their costs and expenses -- over and above the compensation to "Financial Folks" -- disclosed to them.
I have avoided writing about this topic for some time. Not because I didn't want to, but because it quickly becomes very complex.
It is also very easy for the general public to confuse "What do my financial folks get paid?" with "How much does it cost me to own" whatever I might choose to own.
Then I came across an article from Motley Fool. In my opinion they often provide useful information. Now apparently "everyone is in competition with everyone else." I've never used their paid services. I have no knowledge about them. But I do read their (free on their website) material from time to time and find it sometimes interesting.
According to Motley Fool, "Financial Folks" (my phrase, not theirs) can be compensated in these ways
- Percentage of assets
- Hourly Rate
- Flat Fee for a Financial Plan
- One-time sales rewards
- Ongoing annual service payments
- Commissions paid for transactions
Additional impact on your possible results
This material on how "financial folks" get paid is much shorter than it could be because I'm moving related other items that might impact your results to various links and some introductory remarks. Please see all links below. Just keep in mind that any results that might come your way might be affected by a number of additional items over and above disclosed compensation to your "financial folks." Said another way, your costs and / or expenses are likely not just compensation to your "financial folks."
Conflicts of interest have been partially addressed over the course of time. For example, it is rarely (if ever) true any more that similar products and services can compensate advisers differently. As shown in the Cetera Advisors compensation disclosure linked below,
"This compensation formula is the same for all similar products."
On the other hand, I believe it is important for potential clients and the general public to at least be aware of "Soft Dollars" and Revenue Sharing:
"Soft" Dollars - Revenue Sharing - Etc.
In the real world, it is rare -- and maybe non-existent -- for one individual or entity to get paid for any kind of financial products, services and / or advice without arrangements with other parties. I actually think today it is impossible. My own multiple disclosures show at the bottom of every page of my website. Other kinds of folks might have other kinds of disclosures - similar, additional and / or different.
As I said above, I wish it were simpler, but right now, it just isn't.