Rule #5: I Must Understand How I Am Paying for Investment Advice, Services, and Products

Investments are available on all sorts of “platforms” that permit various forms of payment, depending on the advice, services, and products available. Some advisors are transaction-based, meaning that you pay a commission each time you purchase a product. Others are fee-based, meaning that you pay the advisor based on the total assets under management. In addition, some investments, such as certain mutual funds, have internal fees, sales commissions, or both. In some separately managed accounts, fees may be shared between the advisor and outside investment managers. In that case, the advisor acts like a traffic controller, helping the client allocate funds ...

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