From the course: Financial Planning and Wealth Management Fundamentals

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Financial planning: Continued

Financial planning: Continued

From the course: Financial Planning and Wealth Management Fundamentals

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Financial planning: Continued

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Now, financial planners might also earn fees for successful referrals to other specialists. This is kind of in addition to the fees that they're going to earn from their day-to-day activities. So, for example, if a client requires a life insurance policy, which they often do, and the financial planner refers them to an insurance advisor who opens a policy with the client, the FP may be eligible for some sort of commission payment. And it's important to note that FPs usually receive a modest base salary from the firm that they work for, in addition to their portion of the fee revenue that the clients pay. But in these cases, incremental fee revenue earned above a certain threshold is either reduced or capped. And why is that so? Firms do this to ensure that their advisors can earn a comfortable living wage, even while building their book of clients. Firms want to ensure that a certain quality standard of service, so they structure compensation in such a way that prevents advisors from…

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