When planning for retirement, most people focus on investment performance, market trends, and long-term financial goals. However, one of the most important factors in building a successful retirement strategy is often overlooked.
That factor is how your financial advisor is paid.
Understanding financial advisor compensation can make a significant difference in your retirement savings, investment returns, and overall financial confidence. Advisor fees and commissions affect how much of your money stays invested and how much is deducted over time.
At Jacobs Financial Services, we believe every investor deserves transparency. Below, we explain the difference between fee-based advisors and commission-based advisors, and why the way your advisor is compensated truly matters.
How Are Financial Advisors Paid?
Financial advisors are generally compensated in one of two ways:
- Through ongoing advisory fees
- Through commissions from financial products
Each model impacts your retirement account differently, especially over the long term.
The Fee-Based Advisor Model
Many retirement planning firms operate under a fee-based structure, meaning clients pay an ongoing fee for investment management.
These fees are often associated with traditional securities such as:
- Stocks
- Bonds
- Mutual funds
- Managed retirement portfolios
How Fee-Based Advisor Fees Work
In a fee-based model, advisor fees are typically:
- Charged monthly or quarterly
- Calculated as a percentage of assets under management (AUM)
- Ongoing for the entire life of the account
The most important thing to understand is this: These fees continue no matter what the market does. Whether the market rises, falls, or stays flat, clients are still paying the advisory fee.
The Hidden Cost of Ongoing Retirement Fees
At Jacobs Financial Services, we believe ongoing management fees can be a poor deal for many retirement investors because clients pay regardless of investment performance. Even the most experienced financial advisor cannot predict the market. Yet advisory fees are still charged whether you:
- Make money
- Lose money
- Experience little to no change
Over time, these fees can reduce retirement growth significantly, especially for investors holding accounts over decades.
The Commission-Based Advisor Model
A commission-based financial advisor is compensated differently. Instead of charging clients an ongoing management fee, the advisor is paid through the financial institution or insurance company providing the retirement product. At Jacobs Financial Services, we are compensated through commissions paid by the insurance companies we represent.
What Commission-Based Compensation Means for Clients
With our commission-based model:
- 100 percent of your money goes into your retirement investment
- No ongoing advisory fees are deducted month after month
- Compensation is paid upfront rather than continuously
- Your account is not charged simply for remaining invested
For many long-term retirement savers, this structure can be more cost-effective and easier to understand.
Are Commissions Better Than Fees?
Some people assume commissions are automatically a disadvantage. In reality, commissions can often align incentives more effectively for everyday retirement investors.
1. Commission-Based Advisors Focus on Long-Term Relationships
Although compensation is received upfront, our success depends on continued client satisfaction.
Clients stay with us because:
- They trust our retirement guidance
- They return for future financial planning needs
- They continue investing as life changes
2. Client Referrals Drive Our Business
Jacobs Financial Services grows through referrals from friends, family, coworkers, and neighbors. That means we are motivated to provide ongoing service, education, and value that earns trust for the long term.
Why a Commission-Based Model Can Be a Better Fit for Retirement Investors
We believe a commission-based approach is often better for everyday retirement savers because:
- You avoid never-ending advisory fees
- Your money stays fully invested
- Costs are clear, transparent, and upfront
- Your advisor is focused on service, not asset-based billing
Retirement planning should be about protecting your future, not paying fees forever simply to stay invested.
Review Your Retirement Fees Today
If you have ever wondered what fees you are paying inside your retirement accounts, you are not alone. Many investors are surprised to learn how much ongoing advisory fees can reduce their long-term retirement savings.
Our team is here to help you:
- Understand your advisor compensation
- Review the fees inside your retirement plan
- Build a strategy that works in your best interest
If you want clarity about your retirement costs and options, we are here to help. Contact Jacobs Financial Services today to learn more about commission-based retirement planning and how you can keep more of your money working for you.
