How do I get paid? - YouTube

Hey there, welcome back to the Happiness IRA where we talk about how money weaves

itself into your life. So you have this burning question of asking, "Liz how

exactly do you get paid?" or probably, "Liz how do financial advisors get paid?' It's

a fair question and unfortunately the answer is it depends but luckily the

answer is it depends on what type of an advisor and what type of engagement

you're entering into. So let's dive on in on the different types of advisors.

The first type of advisor that you could be working with is a life and annuity

advisor they're usually life and health licensed

and they are able to sell you different types of products so you're talking life

insurance, disability insurance, long-term care insurance, health insurance, and

maybe some other iterations in between. They are paid by commission, typically.

You are not cutting them a check it's the insurance company that cuts them a

check. And the question is, "Am I a life and health insurance agent?" Yes.

The second type of advisor is what we call a stock broker. A stock broker has the

series 7 license and it entitles them to be able to work with mutual funds, stocks,

ETFs, bonds, etc etc. They have a myriad of investment options at their fingertips.

Typically the way that Stock Brokers derive their income is through trading

fees - every time a stock trade is made whether that's a buy or a sell - or

through commissions so if they're selling you a mutual fund then there's a

commission tied to that - whether that's 1% per year or an upfront sales charge

like a 5% on the amount of money that you put in. So am I a Stock Broker? Yes, I

am a Stock Broker. The third type of advisor is an Investment Advisor

Representative and this person typically has the Series 66 license or a

combination of the Series 63 and 65. Either way that they do it, it means that

they can work with anybody in the state that they're registered. For me in Ohio

or any other state that I have become licensed in. The fees are either an

assets under management fee (industry standard is about

percent per year and then tears down from there) or the person is working with

you in a financial planning capacity and they're charging you a fixed fee for

that service. Am I an Investment Advisor Representative? Yes, I am.

Doesn't that muddy the water? What I would encourage you to do - a lot of advisors have

licenses across the board whether it's the life insurance life and health or

Stock Broker or Investment Advisor Representative so you need to know

exactly how you are engaging with that advisor sometimes an advisor depending

on the client situation will use multiple licenses with that client so

for me new clients I'm trying to bring in within the Investment Advisor

Representative space because that's kind of where the industry is going, it's more

transparent in the fees you know exactly what you're getting into upfront you see

those fees come out on a regular basis they're not hidden also our incentives

are aligned. So your goal is probably to grow your money my goal would be that, too.

It's not a competing interest. Changing the product in order to put change in my

pocket. See what I did there? That incentive is taken off the table

however I recognize that there are certain circumstances where I will need

to access those licenses of the Stock Broker and the Life Insurance Agent

so I leave those and continue the education there to kind of meet the

client where they are today.

So that's how I work and hopefully that's helpful

for you as you are interviewing or looking at a financial advisor to

understand how better to ask questions and understand the the world of

financial advisors because there are many people who put on the hat a

financial advisor and you're just not quite sure what capacity you're working

in. The worst thing that can happen is that you think you're working with an

advisor paying for their advice and you're actually paying for the advisor's

product. They're just different engagements that you're working within

so make sure you understand what you're doing there. Alright friends, that's all

I have for today. Thank you so much for tuning in I appreciate it, as always.

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