The Differences among Fee Based Commission Based and Hourly Based Financial Planning Assistants

Financial planning assistants are persons that you might need in shaping and reconstructing your financial foundation. These people are well-versed in the financial industry field, and they have the necessary knowledge and experience to help you reach financial security and independence sooner or later in your life.

In order to become more cost efficient in finding a financial planning assistant, you must know what kind must you get. Generally, financial planning assistants differ in expertise and in rates. The focus of this discussion is on the latter part, which, unfortunately isn’t being tackled most of the time. Here are three of the most common rate differentiated financial planning assistants.

1. Fee based – Fee based financial assistants generally have fixed rates for their service. Normally, they would ask for the tenure of the service and the kind of service that they would render. The longer the tenure and the greater the task or responsibility, the greater the fee. The advantage of having a fee based financial planning assistant are: [1] they are committed to you within the agreed period of time, [2] you get to know the rate that you’ll be paying for a specific period of time, and [3] in most cases, you can save more money with fee based financial planning assistants especially over long periods of time. The disadvantages of having a fee based assistant are: [1] most of these assistants are freelance and aren’t formally connected to brokerages, so they may not be able to give you the best service and products and [2] having a fee based assistant limits you from hiring a more experienced and knowledgeable one in a specific or different field.

2. Commission based – Most financial planning assistants are connected to different brokers and they may earn through the services or products that you acquire or purchase. Commission based financial assistants may end up suggesting more products to you so they could earn more. The advantages of having a commission based financial assistant are: [1] generally, you won’t make regular payments to them because they earn through sales and [2] you may get the best service and product because that is where they earn. However, the disadvantages of having a commission based financial assistant are: [1] you may end up getting more services or products than you really need because these people will earn more if you acquire or purchase more and [2] you may end up getting a product that you really don’t need.

3.Hourly based – At first glance, an hourly based financial assistant planner will look like as the most practical choice.They are paid by the hour and the payment to service ratio is low. Just like all kinds of rate differentiated planners, it has its own pros and cons. The advantages of having an hourly based planner are: [1] you get the maximum effort and service for your payment, [2] you can adjust the time and service that is convenient for both of you, and [3] you’re both not tied up to each other. The disadvantages though of having an hourly based planning assistant are: [1] you may end up paying more than a fixed fee based financial assistant and [2] you may find scheduling conflicts and a hard time setting time for both of you.

Ideally, combining different kind of rate differentiated financial assistants will work best. Get a fee or commission based assistant for an area that you really need serious help in while get an hour based assistant planner for things that don’t matter that much.

The key in making these kinds of financial assistant work best is to first assess your financial needs and getting the best one that can help you. If you don’t know your needs or pitfalls are, you can’t be efficient in hiring the best kind of assistants.