I have had a couple of ‘doubtful’ experiences with investing. Thankfully, the regulations have changed a lot, and I think that the ilk of financial advisors in Singapore has changed quite dramatically too. One area that still needs more transparency is financial advisor fees. Andrew Talbot of Avrio Wealth, told me how they charge, and how it works.
How do your fees and commissions work?
We charge a fee for your financial plan, the process and the outcome. It’s clearly displayed on our website. The fee isn’t paid from you buying a product (this is just commission in a different form), it’s paid directly by you. We want to provide a plan to you that is free from conflicts of interest and is not dependent on selling you a product.
Getting financial advice that is suitable for you can be challenging to obtain. How do you know if the advice is designed for you rather than the ‘advisor’ sitting across from you? Understanding the conflicts of interest in the advice will help guide you through the advice maze and find an advisor that will work for you rather than for them. The biggest indicator? The remuneration of the advisor.
How else does an advisor get paid?
If a financial advisor is paid on a commission basis, it means they’re compensated by the company offering the financial product. Typically, the harder the product is to sell, the higher the commissions on offer for the advisor. The products are likely to be tied to their employer, and the organisation sets the objectives for the advisor as being revenues and profits, rather than customer service or customer retention.
The vested interest is in selling you a product rather than the outcome of the advice. A product will need to be sold to you. It may be suitable for you, and then vested interest didn’t matter. However, in financial advice, it is likely to be in the best interest of the advisor and his institution rather than you.
What does “contingent charging” mean?
Contingent charging is when the financial advisor only gets paid if you open an account or buy a policy. This may be a percentage of the initial fund, or it may be a commission from the product. The advisor remuneration is dependent on you proceeding with the product.
How are you different to other financial planning companies?
You pay for the financial plan. We build, test and refine it; it’s designed especially for you. There isn’t any pre-determined product that we will have to sell to you to get paid. You can take the advice and implement it yourself if you want to.
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