One of the great things about being a fee-only advisor is that I can still look into products that pay a commission (just because a product is commission-based is irrelevant to whether or not it is a good investment).
But here’s the really cool thing: I have set my firm up so that if we choose a commission-based product or investment, I don’t receive the commission; the client does.
That money simply gets added to their equity at the time of purchase, so it’s not a taxable event.
I mention this because this week, we had a great example of this.
We researched and found a great commission-based investment that was perfect for a client of ours.
He ended up investing $3.7M.
Because it was commission-based, and we passed that commission to the client, we were able to make them an extra $227K, which went straight into equity.
Needless to say, everyone was happy.
We are always looking for great investments like these.
Another great one we found not only pays the 7% commission to the client on day one but also pays 10% per year of that higher number.
This makes the first year return 17%, with subsequent years earning 10% yearly.
And that price does not fluctuate, so those are the real expected returns.
This type of thing only comes along every once in a while, but when it does, it is pretty sweet.
The next time you talk with your advisor, ask them if they are also looking into commission-based investments, and then ask them WHO is getting that commission.