By Tasha Borglum, Partner
The advisory fee conversation can be an uncomfortable one because, frankly, it can be pretty confusing. At Moneta, we strive to be extremely transparent and upfront about our fee structure which is actually quite simple…..we are fee only. We receive fees from our clients, and only our clients, as a percentage of assets under management, an hourly rate or a flat rate. That’s it. We receive no commission from the sale of insurance products or annuities, no kickbacks or commissions from any of the fund managers we select for client portfolios or any other form of outside compensation. While it is most common for Moneta Advisors to charge fees based on assets under management, our purpose is to meet clients where they are in their financial journey and price our services accordingly. As such, an hourly rate or flat rate can be appropriate.
Some advisors work on a commission basis, meaning they receive a payment that corresponds directly to the sale of an insurance product, annuity or recommendation of a particular investment fund. A commission can also be paid by the sheer act of buying or selling securities within a client’s portfolio.
Between these two models is a pay structure called “fee-based” compensation. Fee-based advisors often are licensed as both brokers and investment advisor representatives, which can mean they have the ability to accept both advisory fees and commissions, which can be extremely confusing and difficult to understand.
Every client of any advisory firm is entitled to know how much and what kind of fees are being paid to their provider. You are always within your right to ask your advisor for a detailed listing of commissions for every product recommendation or a fee schedule in writing. If an advisor is being transparent with you, then providing this information should not be a problem or an uncomfortable undertaking.
As I’ve described today, there are many ways that advisors can be compensated. While I don’t intend to pick on any other methods or systems, I am a believer that the model we have in place at Moneta allows us to stay truly unbiased in our recommendations…..we sit on the same side of the table as our clients because we aren’t tainted by monetary incentives. It’s a good feeling and one that I am extremely proud of. Please reach out to the Borglum team at borglum@monetagroup.com with additional questions or comments. Thanks for reading.
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