{"id":995,"date":"2020-01-20T23:07:57","date_gmt":"2020-01-20T23:07:57","guid":{"rendered":"https:\/\/finfree.com\/?page_id=995"},"modified":"2021-10-06T21:54:58","modified_gmt":"2021-10-06T21:54:58","slug":"fee-only-investment-management","status":"publish","type":"page","link":"https:\/\/finfree.com\/fee-only-investment-management\/","title":{"rendered":"Fee-Only Investment Management"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text]In recent years investors have increasingly turned to<\/span> fee-only investment management relationships<\/strong>.<\/span><\/a> This trend has been driven, to a large degree, by the desire among both investment professionals and their clients to better align advisor compensation with the work advisors do to help clients grow their portfolios and reach their investment objectives.<\/span><\/p>\n

Commission-based investment advice, which for many years was the standard method of compensating financial professionals, has lost ground as a result. The problem with this method is that it can present a conflict of interest, as it enables a stockbroker or financial advisor to boost his or her compensation by making more trades, whether or not those trades make the client money.<\/span><\/p>\n

The potential to abuse commission-based compensation by engaging in what is known as \u201cchurning,\u201d or making trades solely to earn compensation, has resulted in a move in the financial services industry to compensation methods which are less likely to present conflicts of interest, such as the fee-only investment management approach.<\/span><\/p>\n

At Financial Freedom Fee-Only Wealth Management we value your success, that is why we are a <\/span>fee-only wealth management firm<\/a><\/strong>.<\/span>[\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column]

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Chapter 1<\/div>\n

What is fee-only investment management?<\/h2>\n <\/a>\n <\/div>\n
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Chapter 2<\/div>\n

What is strategic asset allocation?<\/h2>\n <\/a>\n <\/div>\n
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Chapter 3<\/div>\n

What is strategic diversification?<\/h2>\n <\/a>\n <\/div>\n
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Chapter 4<\/div>\n

Fiduciary Standards<\/h2>\n <\/a>\n <\/div>\n
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Chapter 5<\/div>\n

Overview<\/h2>\n <\/a>\n <\/div>\n <\/section>\n\n
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Chapter 1<\/div>\n

What is fee-only investment management?<\/h3>\n <\/header>\n
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Advisors who manage investment portfolios on a fee-only basis receive no per-trade, or commission, compensation. This means that the only compensation they receive from the assets they manage is in the form of fees, typically based on a percentage of total assets under management (AUM) or flat retainer. At Financial Freedom Fee-Only Wealth Management, o<\/span>ur only method of compensation is a fully-disclosed, hourly or retainer-based fee. We do not receive any compensation from third parties or anyone other than you the client.<\/span><\/p>\n

The increased utilization of the fee-only investment management approach makes sense when considered from this standpoint. By removing the incentive for advisors to take actions that are not in the best interests of their clients, a more equitable framework for a productive client-advisor relationship is maintained.<\/span><\/p>\n

This type of compensation arrangement also frees an advisor to make as many, or few, trades as are needed in a client\u2019s account to help the client meet their investment objectives. Because the advisor doesn\u2019t make any more \u2013 or less \u2013 money based on the number of trades they make, they can focus strictly on doing what is best for the client. This makes it easier for advisors to work with clients on sophisticated strategies such as those that involve portfolio rebalancing or tax optimization.<\/span><\/p>\n

\"Green<\/a><\/p>\n

Read our latest blog article: 5 Questions to Ask Your Financial Advisor<\/strong><\/a><\/p>\n <\/div>\n <\/section>\n

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Chapter 2<\/div>\n

What is strategic asset allocation?<\/h3>\n <\/header>\n
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Strategic asset allocation<\/a><\/strong> calls for an investor to establish targets for allocating funds to various asset classes within their portfolio. As those allocations change over time due to performance differences among the different assets, the portfolio is rebalanced to the original allocation on a regular basis.<\/span><\/p>\n

Strategic asset allocation can use various approaches to determine the original allocation targets. Typically, the initial step in drawing up an allocation strategy involves taking into account the following three major factors:\u00a0<\/span><\/p>\n