Wisdom to Wealth- Thursday, April 29

Published: Apr. 29, 2021 at 5:47 PM EDT
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John Halterman: Can an advisor appropriately manage downside risk using commission products? Well, my belief is no. In order to manage downside risk, an advisor has to have full latitude to be able to change asset classes under different economic conditions. And so, if they are charging you a commission, then basically what we know is, they’re probably not going to manage the downside risk. For those people who are trying to actively manage their portfolio, typically, they’re going to charge you an advisory fee. And what that advisory fee does, it’s usually a percentage of assets. And so, instead of charging you on a transaction basis, they charge you a percentage. Now, here’s the good news. If they make you money, okay, they earn more money. And, of course, unfortunately, if you lose money, they also lose money. But the good news is, they are aligned with you in trying to accomplish the best thing. For more answers, call or visit our website today.

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