Tell me, is the financial product you invested in is at the lowest cost to purchase? Unit trusts, mutual funds, and exchange traded funds (ETF) usually have identical management but different expenses.
Common investment and brokerage fees
Brokerage fee: A brokerage fee is a fee charged by the broker that holds your investment account. Brokerage fees include annual fees to maintain the brokerage account, subscriptions for premium research or investing data, fees to access trading platforms or even inactivity fees for infrequent trading. You can generally avoid brokerage account fees by choosing the right broker.
Trade commission: Also called a stock trading fee, this is a brokerage fee that is charged when you buy or sell stocks. You may also pay commissions or fees for buying and selling other investments, like options or exchange-traded funds.
Mutual fund transaction fee: Another brokerage fee, this time charged when you buy and/or sell some mutual funds.
Expense ratio: An annual fee charged by mutual funds, index funds and exchange-traded funds, as a percentage of your investment in the fund.
Sales load: A sales charge or commission on some mutual funds, paid to the broker or salesperson who sold the fund.
Management or advisory fee: Typically a percentage of assets under management, paid by an investor to a financial advisor or robo-advisor.
401(k) fee: An administrative fee to maintain the plan, often passed on to the plan participants by the employer.
Now, you can see that even though you don’t pay upfront, there are different ways a licensed financial advisor is compensated. That said, we can now see the difference between financial advisors and financial coaches.
What are the points of difference between a paid financial coach who offers training and a commissioned financial advisor who profits from the financial products that you buy? And why should you invest in financial coaching?
| Financial coach | Financial advisor |
| Fee based Financial coaches help their clients take control of their finances based on their current situations and goals. | Commission based Financial advisor, on the other hand, take an investment route that may not always be beneficial depending on the financial circumstances. |
| Here is an example of the steps Financial Coaches take their clients through: Meet with the client(s) to assess their current financial situation and understand their financial concerns and goals.Assess the client’s emotional response to their financial situation.Put together the action steps needed to reach these goals.Come up with a game plan as to when the action steps will be completed and what type of support/accountability will be needed.If they don’t already have one, set up a tracking/budgeting system for the client(s) so they can determine where their money is going and how to free up more of it to pay off debt and save money.Check-in with clients several times per month to gauge progress and adjust the plan if needed.Clients typically work with financial coaches for several months up to a year, | A financial advisor is generally used when you need to discuss investment strategy. They are certified to sell investment products and securities (stocks and bonds). |
As a financial coach, I have helped my clients experience an increase in assets by at least $50,000 through a detailed review of 12 financial areas of their life. This is a positive return on investment for the training I offer.
Let’s talk. Schedule an appointment now to discuss how we can assist you in creating the financial life you desire.
