If you work with a financial or investment advisor, you should be aware of the differences in how they work. Some counselors cost money and have no direct income tax benefit for you, while others allow you to take qualified income tax deductions for services rendered. Guess what? Qualifiers generally cost less upfront, have no conflicts of interest, and their fees are tax deductible.

There is no free lunch, and this is especially true when working with financial advisers. If an advisor tells you that investing with him will cost you nothing … you are not being honest. Having worked on both sides of this discussion, the client pays or earns you a commission and some even try to do both, which is worse.

Here is an overview of the three main types of advisers you will come across in your search for financial assistance. I start with what I believe is the best for the client after seeing others first-hand at the beginning of my financial advisory career more than thirty years ago.

Flat rate advisers: (Tax deductible rates)

Wouldn’t you rather pay an advisor to work exclusively for you? This is exactly what you get with a “fee only” advisor. They receive absolutely no compensation from investment companies, brokers, insurance companies, or annuities for any of the investments or services that are recommended. Most, if not all, are “Without charge”, which means that no commissions are paid.

They research and recommend the lowest cost and best performing options available on the market. As a fee advisor myself, I look for investments, insurance and other financial services that I personally want to use. If they are not good enough for me, they are not good enough for a client.

Your fees are typically lower, sometimes up to 80% lower, than the initial or final costs that you will pay in commissions. A fee advisor has NO conflicts of interest when it comes to who they work for. They work only for you and have a 100% vested interest in your goals and your financial success.

Commission-based advisers and brokers: (Non-deductible commissions)

Any advisor who doesn’t tell you how they get paid, or doesn’t tell you that they get paid in various ways, is probably a commission-based advisor. Although some of them are very good, they all have a conflict of interest because their clients do not sign their paycheck … your company does it.

The unfortunate reality is that when your company tells them to increase their numbers or that they need to sell more of this product or service, they find a way to do it. Even if it is not the best for the client. This was the main reason I left that side of the financial world early in my career and became a payment advisor.

As you may have expected, investment fees are paid up front or at the end, but none of them are tax deductible.

Insurance and annuity agents: (Non-deductible commissions)

The last group to offer financial advice are insurance and annuity brokers. They are paid agent commissions and the higher the cost of their insurance or the higher the surrender charges on their annuity, the more they earn. I find it hard to believe that they are looking for YOUR best interest when their income is based on selling you a higher cost product or service.

As a general rule of thumb, they never tell you about the lowest-cost or no-load insurance and annuity products. Only a fee advisor will guide you in this direction.


As you can see, I am biased. Having worked in each of these fields, I discovered that it was more important to consider the best interest of the customer than the bottom line of a great company. Fee-only clients generally receive nearly five years of service for the same initial cost that they will pay commissioned advisors.

Working with an advisor is never free. It can be unbiased, less expensive, and offer some tax incentives. You can decide who you would prefer to work with to help chart your financial future. Someone who gets paid more only if they do better … or someone who gets paid substantially more up front, no matter how well or badly they do it.

To discover additional financial and income tax strategies, check out my blog or download his FREE Wealth Expansion Kit by clicking here. The first step to building wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

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