Browser wrote:I'm generally aware that the majority of FAs are no-fee and make their money by getting a cut of the funds they put their clients into. But I don't understand the specifics of how that works and what their cut is. Do they collect a one-time "commission" from fund providers? Do they purvey special share classes of the funds that have a higher ER and get an on-going "royalty" of sorts? I'd appreciate knowing more about how their incentives are structured. I don't personally use an FA, but have friends who do and I don't think they have a clue how their FA is making a living off of them. I guess they think the FA works on a pro bono basis.
Beat The Street wrote:As someone who works in the industry I can't tell you how many times a prospective client has told me that their current FA isn't charging them anything, then they bring in their statements loaded up with C shares.
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What are C shares? A problem in my area is that there aren't any fee-only advisors that I can tell. These are rare birds. The money must be in the no-fee game.