Understanding how an advisor is compensated is extremely important. The compensation method can have a major influence on the advice provided.
We define a commission-based compensation arrangement as any relationship where the advisor’s compensation is based on the buying and selling of an investment product. Compensation is generally linked to activity. Commission-based relationships have a high potential for conflict of interest. Independent Wealth Management does not accept commissions.
We define a fee-based compensation arrangement as any relationship where the advisor’s compensation is based on receiving compensation from multiple sources. There may be a fee charged for assets under management. Because there are multiple types of compensation, there is potential for confusion and conflicts. Independent Wealth Management is not fee-based.
We define a fee-only compensation arrangement as any relationship where the advisor’s compensation is only paid by the client to the advisor. The fee is generally calculated as a percent of the assets under management, an annual retainer, or an hourly billing rate. Because no commissions may be received, Fee-only compensation has the least potential for conflicts of interest. Independent Wealth Management is a fee-only investment firm.