Financial Planning for Cops – Do You Know How Much Your Financial Advisor Charges You?

Police officers are like most people and have no idea how much they pay for investment, insurance, or retirement advice.  A lot of people mistakenly assume they receive free advice.  Some advisors do not explain their fees and many consumers do not take the time to ask.  People in law enforcement, like most people, are usually shocked when I explain how much they’ve been paying in commissions or fees.

There are many different ways advisors are paid in the financial services industry.  For the sake of this brief article, I will broadly categorize all of the fee structures into three categories.  They are Commissions, Fee-Only and Fee Based.

Commissions

The traditional and most common way fees are charged is through commissions.  Commissions are typically paid when an investment or insurance product is either bought or sold.  Commission based advisors do not get paid unless you buy or sell something.  If you believe you do not pay fees to your insurance or investment advisor, than you most likely work with a commissioned advisor that receives a percentage of each transaction.

Fee-Only

The Fee Only model is the newest payment structure on the block.  There are different ways Fee-Only advisors are paid.  Fees may come from a flat annual retainer, by the hour, or a flat annual fee based on a percentage of your investment assets.  Fee-only advisors do not receive any commissions or kickbacks from the investment products they recommend.  Fee-Only advisors tend to be more comprehensive and objective because they are paid the same regardless of which investments you choose.

Fee Based

Fee Based advisors are a hybrid of the Commission and Fee-Only model.  Fee Based advisors are commonly mistaken for Fee-Only, however, there is a distinct difference between the two.  The Fee Based advisor receives commissions for products sold, but also charges an additional fee for advice.  In contrast, Fee-Only advisors don’t receive any compensation from insurance or investment products sales.

So which is best?

As objective as I’ve tried to be in this article, I’m a Fee-Only advisor so I’m obviously biased.  As in any industry there are good and bad people in each of the categories.  Your job is to understand exactly what you’re paying and what you get in exchange for that fee.  Each of the three fee structures has advantages and disadvantages to both the advisor and the consumer.  There is not enough space in this article to cover all the pros and cons, but I encourage you to learn more and then choose an advisor with a fee structure that is most likely to put your interests first.

Discover more at http://www.cjrylantwealthmanagement.com and get the FREE report “The 7 Secrets to Financial Independence.”
Chuck J. Rylant, MBA, CFP®
C. J. Rylant Wealth Management

Photo Credit: “Money” by TW Collins as Creative Commons on Flickr.com

About Chuck Rylant

Chuck Rylant is a retired police officer and regular contributor to CopsAlive.com. He owns his own financial planning business and built it while he was still working in law enforcement. Prior to that Chuck had been a full time California Police Officer for 15 years. He has worked as a detective, patrol officer, field training officer and SWAT team member. He also served his department by volunteering as a Police Officer Association Board member. Chuck is also an active member of the Santa Maria Police Council which is a non-profit community organization developed to raise money specifically for the police department. Chuck is the owner of C. J. Rylant Wealth Management. His firm provides personal fee only financial planning and specializes in providing objective advice to police officers. His clients have discovered how to worry less about money and enjoy life more. Chuck can be reached on his website at: http://www.chuckrylant.com. Here's a link to an interesting video from Chuck about Mutual Fund Fees: http://www.youtube.com/watch?v=NLm6ngyLnw8
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3 Comments

  1. I am the CEO-Founder of Investors Protection Agency (IPA) based in Dallas, Texas.
    I have just completed the elements to launch our newest (and dearest to my heart as, I am a former LEO) program called L.E.F.T. It stands for “Law Enforcements Financial Team.”
    It covers everything from DROP to how to start your own business AFTER retirement, or how to safely invest your funds while avoiding fraud. We charge a minor annual ($49.00) fee…and that’s all the member will be asked to pay for ANY services they may require. We have staff and resources that either donate their time or greatly reduce their fees so, we as an organization can absorb these costs on behalf of the member(s). We are all former military and law enforcement and understand how “it all works in their world of finances etc.” You MUST be verified LEO etc but, after this many doors are opened to you as a member such as; free sign-up and 30 free minutes offered by Call Trunk, free membership to LEOAFFAIRS.com, the largest on-line LEO site on the planet! Coupons for FREE products from our Police supply store URBANWARRIORSUPPLY.COM
    Etc…Etc…
    We would love to have any one fitting this criteria come visit our site and join the LEFT family! Its LEO’s looking out for LEO’s…..Hope to see you ya there! Bruce S. Martin 1-866-853-4766 ext 134

  2. Thanks for your comment.

    Here are two resources I would start with:

    1st. http://www.acaplanners.org

    2nd. http://www.napfa.org/

    You’re pretty safe not to get ripped off and get good, solid advice at those two places.

    If you don’t find a match with those two, reach out to me and I will try to suggest something else or help you myself. Good luck.

    Chuck


    Chuck J. Rylant, MBA, CFP
    http://chuckrylant.com

  3. Mr. Rylant,

    Thank you for the information. I am a Police Sgt. in Southern California (Pomona) and was wondering if you are aware of any Financial Planners that you can recommend.

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