Do you know how your current advisor is paid? What should you ask about fees and commissions when you are searching for an advisor? These are crucial questions. You need to understand how advisors make money so that you can weigh the advice that you receive. Overall, some are paid commissions on products they sell. Some charge a fee for impartial service. Others make their money with a combination of commissions and fees.

Many advisors today are commission-based, a model that has long existed. If you buy something from them, they receive a fee for services based on a percentage of the dollar amount of the sale. That’s how the majority of insurance products and investments such as mutual funds still are handled.

As for those advisors who tell you that they work for you at no charge because their company pays the commission, ask yourself this: If they do all that work for you for nothing, how do they feed their kids and pay the mortgage? You have to buy something for the commissions to flow, and you may hear recommendations that will compensate them.

Fee-based planners make their money by creating a financial strategy for you. Those who also sell products or manage assets would like you to implement that plan with them, but you are free to take the plan elsewhere to put it into action. The licensing of fee advisors requires that they act in a fiduciary capacity—that is, in your best interest as would be considered prudent according to a court of law.

That’s why you may want to pay separately for planning services. The advisor has no vested interest or bias. He or she gets paid for the work, and you can implement the strategies as you please, if at all. Thinking it might be time for a second opinion on your financial plan? Go to www.mysecondopiniontoday.com for a free consultation and portfolio review to see if you are headed in the right direction.