We believe investors should understand all of the investment-related costs they bear, including how their financial advisor is paid. There are typically three compensation methods for financial advisors:
- Fee-only investment advisor representatives. Our clients pay us an advisory fee which we detail in our quarterly portfolio update letters. Neither Northland Capital Management nor any of its personnel receive any other forms of compensation from any other financial industry activities. We are required to follow fiduciary principles at all times.
- Fees and commissions (“dually-registered” representatives). Some financial advisors wear many hats including investment advisor representative, broker, and/or life insurance agent. They may receive both fee and commission income. Some of their recommendations may be covered by the fiduciary standard and some may be covered by the suitability standard.
- Commission-only brokers, securities representatives, life insurance agents, etc. These financial advisors are commissioned salespersons. Many of the investment products they may sell, such as annuities and mutual funds, have an imbedded expense from which they derive their commission.
We believe fee-only compensation promotes transparency and better aligns the financial interests of clients and their advisors.