Many people think whenever a transaction happens in their account, their advisor has to get paid.
It’s just not true. In fact, there are 2 types of advisors:
Brokers: Receive commissions every time a security transaction happens
Fiduciaries: Receive a flat fee, regardless of transactions
The vast majority of “Advisors” are brokers. Always ask your advisor how they get paid, and consider the incentives. An advisor paid as a percentage of your account has a big incentive to grow your account (and their fee) and also a big incentive to protect your account (and their income).
Fiduciary is a big jargony word. All it means is that the advisor is liable for the advice they give you. Just like a doctor, a lawyer, and other advice professions. As an investor, you want your advisor to have this title. Most don't. Even if they say they do.
When you make an investment, you want your entire investment working for you, right? Make sure you’re not losing 3%-7% day one to a front-load. These charges, like commissions, are only paid to brokers. True fee-only fiduciaries with your best interests at heart will not charge or accept loads to get started.
Do you think a advisor who gets paid 3-7% of your account up front really has your best interests at heart?
When you end the relationship with an advisor, it should, well… end. That’s it. You shouldn’t notice “Termination Fees” or “Processing Fees” on your last statement. Always read everything you sign and always ask an advisor if there are any termination or surrender charges.