Avoid percentage of AUA fees for a financial plan4 min read 24 Aug 2021, 12:54 AM IST
Hourly-fee RIAs explicitly disclose their total fixed fee and also their hourly fee
I have previously written that there is no predictable way to become rich, but a predictable way to avoid becoming poor. Any financial planner and Sebi-registered investment adviser (Sebi-RIA) can only prevent a client from becoming poor. RIAs can do this by ensuring that clients save enough, don’t take too much of risk and avoid high-fee products. Further, I have previously explained how one should go about selecting an advice-only (i.e. hourly-fee or fixed-fee) RIA. Here, I explain why you should select an hourly-fee RIA than a fixed-fee RIA. Clients should select a more transparent fee structure as it minimizes conflict of interest between the client and the RIA. All RIA fee structures are usually more transparent than the high and hidden annual commissions of Amfi-registered mutual fund distributors that are difficult to exit from. Let’s look at the three possible RIA fee structures.