What is the payoff of working with a financial advisor - Vanguard study, Ep #80 

<p> </p> <p>There are many ways you can do your retirement investing, from do-it-yourself platforms like Vanguard to the exclusive advice of Financial Advisors. If you want to go the route of working with a Financial Advisor, you need to understand how they are paid and how that impacts the service you will receive. Most importantly, it’s important to know how you can quantify the value a financial advisor brings to the table. Vanguard did a study on this issue a while back that revealed a number of benefits the average Financial Advisor client gains from working with them, including a 3.3% overall increased return. Listen to hear the details.</p> <h2>You will want to hear this episode if you are interested in...</h2> <ul> <li>Mastering basics — Davis Love, III: Grip, Stance, Alignment [1:22]</li> <li>How Advisors are paid and how the methods work [2:22]</li> <li>Why did Vanguard advocate working with a Financial Advisor [10:09]</li> <li>Specialties within the Financial Advising industry [14:13]</li> </ul> <h2>Three basic models of how Financial Advisors are paid</h2> <p>If you’re going to be paying someone to work on your kitchen, you want to know how they are going to charge you. Will you pay a set price for the entire project? Will you pay them per man-hour worked? Will you pay no a sliding scale depending on the cost of materials? The same is true in the Financial Advising world. You need to know how your Advisor is being paid. There are three basic models you’ll hear…</p> <ul> <li>Hourly rate consulting</li> <li>Commissions, based on financial products sold to their clients</li> <li>Advisory Fee Advisors, you pay a flat fee (usually around 1%)</li> </ul> <p>Each of these models has it’s reasons and you’ll need to make your own decision about which model you feel comfortable with. My philosophy is that the client’s interests are the only interests that matter, so I work on an Advisory Fee structure.</p> <h2>Can you do just as well on your own as you would if you worked with a Financial Advisor?</h2> <p>Financ