Fee-Only vs. Commission Advisors

What is a fee-only investment advisor?

A fee-only investment advisor is a Registered Investment Advisor (RIA) who is registered with either the Securities Exchange Commission (SEC) or the State Securities Board of the state you reside in, or both. A fee advisor can charge a fee of up to 2% a year, usually paid quarterly, to help you select, manage, and monitor your retirement plan or brokerage investment account using both domestic and international mutual funds and individual stock and bond portfolios. If you hire a fee-only investment advisor, you are entitled under Federal and State laws to require full disclosure for all fees and expenses paid to the investment advisor.

The dedicated fee-only investment advisor will not take commission compensation by selling "load" mutual funds or insurance annuities. A true fee-only advisor should only recommend "no-load" (no commissions) mutual funds from firms like Fidelity Investments, Schwab or TD Waterhouse for your  personal and business retirement and individual brokerage accounts, or Fidelity Investments for your ORP/403(b) investment portfolios

Lack of Disclosure:

Sector ETF and Mutual Fund Investing

As an investor, when you pay an investment advisor either a fee or a commission to manage your retirement or brokerage portfolio, don't waste your time and money by allowing your paid advisor to invest in diversified mutual funds, especially with an often overused "buy and hold" strategy.

First, when it comes to stock investing, diversified stock mutual funds are funds that invest in stocks representing a variety of sectors of the economy, the logic being that when one sector is lagging, another sector will flourish.

This is a flawed logic. A competent money manager would have you invested primarily in sectors of the economy (and global regions) that are doing well, while avoiding the weak declining sectors and global regions.

Which begs the question: if you are going to invest in a diversified stock mutual fund that does not require more sophisticated selection strategy, why pay a fee or commission for diversified mutual fund advice? You alone can invest in a diversified, no-load Standard and Poor 500 index (SPY) or the Nasdaq 100 (QQQ) and generally get the same results.

Another advantage of competent sector or world region investing is that the performance of sector funds can generate roughly 75% of the gains of individual stocks with only 50% of the risk.