Straight Talk

Do you know what you're paying your financial advisor?

Do you know what you're paying?

Looking for a financial advisor? Wondering how you'll pay him or her — and just how much?

There are three types of advisors you can work with, according to certified financial planner Ron Carson, founder and CEO of Carson Wealth Management Group. The first will charge you commission; the second, a management fee on the assets handled; and the third, a hybrid of the first two approaches. But all might also charge you hidden fees.

"When you're working with a financial advisor — regardless of what type of advisor they are — you need to really understand not only how they're being compensated but what are the fees that aren't so transparent," said Carson, adding that many advisors themselves don't understand all the hidden fees and expenses associated with asset management.

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"You do have to nearly be a forensic accountant to find all these fees," he added. "You'll be shocked to know that, in some cases, the fee you think you're paying could be a third or less of what the total fee is."

It's a good idea to look at an advisor's Form ADV to see if there's any additional compensation they're able to receive, said Carson. (An ADV is the "uniform form used by investment advisors to register with both the Securities and Exchange Commission ... and state securities authorities," according to the SEC.)

How to find a financial advisor

"A way to be sure that you're not paying a lot of additional costs is really understanding the most basic holding that you have in your portfolio and try not to own a lot of what we call 'packaged products,'" where fees can be both high — and hidden, he said.

"Take control of how your investments are being managed and the expenses that you're paying," Carson said. "You have a right to know."