Different Ways Financial Advisors Charge

When looking for a financial advisor, there are two important things to keep in mind. What kind of certification do they need and how do they charge. Knowing this information will help you to make a better-informed decision.

Here are a few certifications you may want to consider when hiring a financial advisor:

Certified Financial Planner (CFP) – they have demonstrated competency in all areas of financial planning and have studied more than 100 topics including stocks, bonds, insurance, taxes, and retirement planning. In addition to passing a certification exam, CFP’s must also adhere to the CFP Board’s code of ethics.

Chartered Financial Analyst (CFA) – this certification requires three years of qualifying work experience and passing three difficult exams to demonstrate their competency. They have an extensive knowledge of accounting, economics, and portfolio management.

Certified Fund Specialist (CFS) – this certification deals mostly with an expertise in mutual funds. They advise clients on fund investments and can buy and sell funds for clients.

While there are several other certifications available, these are the ones you’ll most frequently see and need to know as you’re looking for a financial advisor.

When talking to them though, it’s important to understand how they charge and what that may mean for you. There are several ways financial advisors charge, these are the most common:


Meeting with a fee-based financial advisor is probably best if you just want advice then want to implicate it on your own. Ask all the questions you want and get the information you seek during one or two meetings. The fee is charged on an hourly basis so the advisor makes the same amount of money no matter what you do with the information.

Project Fee

If there’s only one project you want help with, like setting up your retirement plan, this flat fee service charges you the same amount whether the project takes one hour or three. Not all advisors offer this option so be sure to ask.


This is probably the most common way for financial advisors to charge. They receive a commission for financial products they sell you like mutual funds or investment accounts. The pitfall to this way of charging is that you may not be receiving the best advice for you; the financial advisor may be advising you in the direction of a fund or investment that will pay him or her a higher commission.

Combination of Fee and Commission

Depending on the services you’re looking for, you may be charged a fee for some services and commission for others, although this is not as common.


If you have investments, assets, and stocks that you need to have managed for you, you may find that you want ongoing advice. A retainer is a flat fee paid monthly, quarterly, or annually and it doesn’t change based on the advice or return that you receive. Be sure to ask for a written description of the specific services you will receive in exchange for your retainer fee.

Fees and services vary based on your needs and the certification of the financial advisor you’re working with. Be sure to do your homework so you know which advisor and fee base works best for your needs.

IRS Announces 2018 Pension Plan Limitations (And Other IRS Changes You NEED to Know!)

IRS has a few new changes that you need to know about for retirement plan savings contributions. For the most part, your contribution levels have slightly increased, allowing you to contribute more to these plans. But you do want to be aware of your limits because making a higher contribution can cost you at tax time. These limits are for 2018 and don’t have any effect on your 2017 contributions.

Here are the highlights of these changes for 2018:

* Contribution limits for employees participating in 401(k) plans and individuals participating in the government’s Thrift Savings Plan have been increased from $18,000 to $18,500. While this isn’t a huge increase, it means a little more money to your retirement savings plan, which is always a plus.

* You are able to deduct traditional IRA contributions if you meet certain conditions. And if you have a retirement plan at work, the deduction may be reduced or phased out until it is eliminated, depending on your filing status and income. These are the new elimination and phase out ranges:

  • If you’re single, your phase out range has been increased and ranges from $63K to $73K.
  • If you’re married, your phase out range has also been increased and ranges from $101K to $121K
  • If you do not have a workplace retirement plan but you’re married, the deduction is phased out if your combined income is between $189K and $199K.
  • And if you’re married but filing separately and you have a workplace retirement plan, the phase out range isn’t affected by the annual cost-of-living adjustment and remains the same, $0 to $10K.

* The phase out range for contributions to a Roth IRA is $120K to $135K for singles or heads of household. And for married couples filing jointly it’s now $189K to $199K. If you’re married but filing separately, you are not subject to cost-of-living increases here either. All of these ranges are either increased or remained the same.

* As for Retirement Savings Contribution Credits (also known as Saver’s Credit), the income limit for low/moderate income level workers is $63K for married couples who are filing jointly. Heads of household filers income limit is now $47,250 and singles income limit is $31,500. These are all an increase.

There are also a few limitations that have remained unchanged:

* Annual contributions to an IRA stayed the same at $5,500. If you’re over 50, the additional catch-up contribution is not subject to an annual cost-of-living increase and remains at $1K.

* For 401(k), Thrift Savings Plan, and other work-related savings plans, the catch-up contribution for employees over 50 also remains the same at $6K.

If you’re not sure how these changes affect you, talk to a tax specialist to ensure you won’t be penalized later. These changes now allow you to make higher contributions to your retirement plan savings without paying penalties. The increase in contribution levels is due to an annual cost-of-living increase so you should see similar contribution level increases each year. Take advantage of these new limitations to make the most of your retirement savings.