Pay Close Attention to Broker Fees

Stockbrokers usually earn sales commissions every time you

buy or sell securities. If you work with a broker who gets

compensated this way, make sure that he’s not urging you to

buy and sell, over and over, for no reason other than

creating more commissions.

Today, many brokers and other financial advisors are charging

fees rather than commissions. Fees might be:

• By the hour. Professionals such as attorneys and accountants

  often bill this way.

• By retainer. You might pay so much per year, or for a specific

  project.

• By assets under management. If your advisor handles $250,000

  for you, for example, and charges a 2 percent fee, you’d pay

  $5,000 per year.

Be sure you understand how these fees work, how much you wind

up paying, and whether you’re getting your money’s worth. If

you pay by the hour, for example, every phone call might wind

up costing you money. On the other hand, if you’re paying an

annual fee you can call your advisor at any time, to get

answers to your financial questions as they arise.