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How does that make a difference? If I give a financial advisor 10% of all profit I make, and make no profit, he gets nothing. So, he has an incentive to make me

• lutusp 13y ago
  > If I give a financial advisor 10% of all profit I make, and make no profit, he gets nothing. So, he has an incentive to make me money. You're missing the point. Your financial situation is not the same as that of your advisor. If you make 8% per annum on a very safe investment, and your advisor makes 1% of your 8%, that might be a good deal for you. If you make 8% on a very unsafe investment and your advisor gets 1% of your 8% plus 10% of the transaction fees under the table, then you and he are no longer on the same page. > Why would a deal on the investment make a difference there, and how would paying him by the hour solve this? See above. And: http://www.marketwatch.com/story/new-credit-card-pitchman-your-adviser-2013-02-26 http://www.marketwatch.com/story/new-credit-card-pitchman-yo... Quote: "The strategy, known on Wall Street as “cross-selling,” helps boost profits by steering customers from a firm’s brokerage operations to its retail and investment banks, and vice versa. Financial advisers benefit by earning bonuses for marketing loan products." The financial advisor gets the bonus, not the investor. The reason the bonus is offered is because the touted transactions are unattractive to anyone who understands the markets, so there has to be an added incentive. In this way, a financial advisor feathers his own nest at your risk and expense. The idea that a financial advisor has only your interests in mind is a myth.