Independent Advisor Tim Hayes Dives Deep into Fee-Based and Fee-Only Financial Services and How These Benefit Clients
Summary: New regulations set out to standardize financial planning compensation and align product recommendations and services with clients’ best interests.
Boston, MA – In an updated blog post, Financial Advisor Tim Hayes discusses fee-only and fee-based financial services. The comprehensive article covers key topics, including the set of regulations that made this setup for financial planning compensation possible, what is fee-based advice, how financial advisors are regulated, and how the financial services industry is adapting to these new regulations.
According to the article, the financial planning compensation arrangement has experienced significant changes over the years. Tim Hayes, the article’s author, further elaborates on this statement. According to him, through this fee-based or fee-only arrangement, the financial advisor will charge an ongoing fee, instead of commissions. This is motivated by the need to disconnect the compensation from the financial products or services that the financial advisor or planner offers, thereby giving clients the opportunity to access better advice.
The article also covers the differences between financial advisors and financial planners, as well as how the new Fiduciary Rule and the new rule from the SEC are designed to protect the client by requiring broker-dealers to align their products and services with the client’s best interests.
The author also shares that while fee-only or fee-based arrangements are becoming the norm and that most of his business is run as a fee-only investment advisor representative, he still remains dual-registered. Hayes explains that this setup works for him because it allows him to provide financial services that are not product-based, referring to the fee-only arrangement. When it comes to Hayes being a registered representative, he states that “[this] makes more sense for the client”. Citing an example of a 25-year-old client who wants to buy a Roth IRA with $6,000, Hayes shares that “[he can’t] imagine charging them a fee for the next 40 years.”
Hayes also shares some tips for individuals who have an IRA and are working with a financial advisor. According to him, now is the best time to review key aspects of their financial planning arrangement, including the fees or commissions and best interests. He also urges firms to ensure that any advisor compensation should align with the Department of Labor’s new interpretation and the new SEC rule, which covers the new standard called Regulation Best Interest.
About Tim Hayes: Tim Hayes started in financial services at a small company that specialized in 403(b) plans. When the company was bought out by MetLife, he worked for a division of the company for two decades, focusing on retirement plans and client portfolio management. He became an independent financial advisor over a decade ago and is now registered with Cambridge Investment Research Advisors, Inc. and Cambridge Investment Research, Inc. He has several securities licenses, including Series 6 and Series 66, as well as designations, which include Certified Annuity Specialist from the Institute of Business & Finance and Accredited Investment Fiduciary, among other designations.
These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice. Content provided via links to third party sites should not be considered an endorsement of content, which we cannot verify completeness or accuracy of.
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Financial Advisor Tim Hayes
What Is My Financial Advisor Experience
I’ve held an industry securities registration for 30+ years and am subject to SEC and FINRA oversight.
How Much Do I Charge?
Most clients pay fee-only or an hourly rate. The size and complexity of the client’s wealth management and financial and retirement planning determine that fee.
Some clients pay a commission, mainly those with smaller accounts, i.e., Roth IRAs, some public-school teachers with 403b retirement accounts, or parents or grandparents who set up a 529 college savings plan.
Do We Need to Meet in Person?
The first introductory and fact-finding appointment can be in-person or by phone. The next meeting where I provide my recommendations should be in-person. (For the time being, telephone, Zoom, and email are replacing some in-person meetings.)
Subsequent meetings during which we monitor your progress and investments can be done in-person or by phone, email, Zoom, or Skype – or, more likely, a combination of these meeting types.
Contact Tim
Tim has offices in Boston and South Dartmouth, Massachusetts. He’s licensed to handle securities in 8 states: Massachusetts, Rhode Island, New Hampshire, New York, New Jersey, Connecticut, Maine, and Florida.
