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How Do You Get Paid?

This is How I Get Paid.

The majority of Minnesota company 401(k) retirement plan participants that take the time to meet with me have never worked with a fee-based investment advisor who provides investment advice on a company retirement plan account.

As you would assume, the conversation eventually gets around to the question of, “How do you get paid?”

Like many questions in the financial services industry, the answer comes in multiple parts. The first part of the answer is to understand the difference between a Registered Investment Advisor and a financial advisor. 

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A Registered Investment Advisor (RIA) is an individual or company that is registered with a state securities agency or the Securities and Exchange Commission.

An RIA is a fiduciary for his or her client’s financial assets. RIA’s are held to the same high fiduciary standard as a lawyer or certified public accountant, and always work in their client’s best interest.

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The second part of the answer is more specific. Because an RIA is always a fiduciary, he or she cannot sell financial products on their own or get paid by another company to sell their financial products to clients. Instead, and RIA is always a fee based advisor whose investment advisory fees are paid by the client he or she works for.

RIA’s are usually paid advisory fees based on an annual percentage rate of the value of their client’s investment accounts. Sometimes RIA’s are paid flat fees.

So here is the compound answer to the simple “How do you get paid” question.  It is more information than many people ask for, but in my experience, they are happy to receive the additional information.

Ric Lager
Lager & Company, Inc.

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