A financial advisor is your guru in finances who enlightens you on your path to financial prosperity. Many investors depend totally on the guidance of their financial advisors. Especially during the economically weak period you desperately need a financial advisor to cruise you to safety regardless of whether you want guidance in personal or business finances. When a financial advisor is such a vital person you should be aware of the most ideal way of paying him/her. If your financial advisor is happy, you’ll be happy. So take care that you pay him/her in the best possible way. Some advisors like to take their pay thorough session to session fee while others want to take their payments as commissions.

The mode of payment is not actually as important as the amount paid but there’s no harm in knowing the methods. The Securities Exchange Commission opines that both fee and commission based methods come with pros and cons and you really cannot single out any one method as better than the other.

Generally, it has been calculated that a regular fee payment turns out to be more expensive than a one time payment of commission of 5 %. But you should always do some math of your own to find out which is a better alternative for you. Calculate all the total costs that you’ll have to bear for an investment for a given period of time. Just the way you’d calculate your mortgage due on your car, you need to calculate your total investment costs. This will let you know whether monthly payments or a one time payment will be more beneficial for you.

The fee investment that you make should be able to make you achieve your results. Your investment advisor might charge you a low fee, but what’s the point in paying him month after month if you’re not able to achieve your desired results? It doesn’t matter if it costs a bit more for you, but always hire an advisor who can get you desired results within your risk entertaining limits and time stipulations.

You might have come across fee-based investment advisors who offer you mutual funds on low fees. Be careful because the fee they charged is very misguiding. Not that they do it intentionally, but their calculations might make it appear so. Their fees are calculated on the mutual fund fees which may keep varying due to a lot of conditions. This becomes a problem in the case of people who make large investments, in which case the fee of the advisor should be calculated on the basis of Separately Managed Accounts (SMA). On the whole try to avoid fee-based advisors who offer services at ‘very low fees’ based on the mutual funds.

In most cases you should always look out for credible fiduciaries, with whom you can build up a relationship on trust and integrity. These fiduciaries work in the best interest of their clients and  work under the ‘Trust with Verification’ rule that allows them to verify the fees and service that your financial advisor gives you.

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