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How Do Financial Professionals Get Paid: Making Sense of Diverse Compensation Models
Ladies, let’s be honest – figuring out how financial professionals earn their keep can be a real head-scratcher! 🌟💸 With realtors, mortgage brokers, financial advisors, and money coaches all marching to their own payment drum, it’s easy to get lost in the jumble. 🏠🔑💼💡
But fear not! By gaining a solid grasp of how they’re compensated, we empower ourselves to make shrewd choices when enlisting their services.
Let’s demystify the money game!
Realtors are crucial in real estate deals. They make money through commissions, which are a percentage of the property’s sale price. Here’s how it works:
- Seller’s Agent: If a realtor works for the seller, they typically get 5-6% of the sale price as their commission.
- Buyer’s Agent: When they represent the buyer, they often get a part of the commission paid by the seller.
- Dual Agency: Sometimes, a realtor may represent both the buyer and seller. In this case, the commission may be different and subject to negotiation.
Kathryn Hoffman, CDRE
Real Estate Broker at Associate CENTURY 21 Circle
Kathryn can help you buy or sell your home. She specialize in buying or selling during a divorce. Her specialization equips her to handle the real estate aspect with neutrality and efficiency and ensure the orders for the divorce are carried out.
Mortgage brokers help people find the right home loans. They work as go-betweens for borrowers and lenders. Here’s how they get paid:
- Lender-Paid Model: Sometimes, the lender pays the broker a commission based on the loan amount and interest rate.
- Borrower-Paid Model: Or, borrowers can pay the broker directly. This can be a fee based on a percentage of the loan or a flat fee.”
Vice President of Mortgage Lending at CrossCountry Mortgage, LLC
Marla knows communication is key, and sharing information is as important as listening. She will make sure you know what’s happening with your mortgage as it progresses through the process and will be available to answer your questions. Marla will be with you every step of the way, from application to closing and beyond.
Financial advisors help with investments, retirement plans, and overall money matters. They earn their income in various ways:
- Commission-Based: Some advisors earn money by selling financial products like mutual funds or insurance. They get paid when you buy the products.
- Fee-Based: These advisors charge for their advice and can also earn commissions from selling certain products.
- Fee-Only: These advisors only charge for advice and don’t get commissions. They might have an hourly rate, a fixed fee, or charge based on how much money they manage for you (AUM).
AUM (Assets Under Management): If advisors manage your investments, they can charge an annual fee, often a percentage of what they’re managing. For example, it’s usually 1% for up to a million dollars, and it goes down as you invest more.
Founder and CEO at Investably LLC
Michelle loves helping women-led households to reach financial freedom that comes from our collaborative planning to become work-optional with sustainable monthly income, uncover tax savings over their lifetime, and optimize their business exit paydays to create a legacy for their family and the greater community. Michelle can help with investments, being compensated with a percentage of AUM or you can have a Fiduciary Relationship with Ongoing Planning & Advisory Service for a annual fee paid monthly.
Money coaches help people get better with their money and reach their financial goals. They get paid in different ways:
- Hourly Rate: You pay by the hour for coaching and advice.
- Package-Based: Some offer bundles with multiple sessions or certain services for a set fee.
- Subscription-Based: Others provide ongoing help through subscriptions. You pay a monthly or yearly fee for access to resources, advice, and regular check-ins.
Money Coach and Financial Educator at Money Mastery with Pam
Concerned about money? Money Mastery with Pam helps young adults, parents & small business owners develop a better relationship with their money. Pam offers hourly sessions or package based bundles for 3 or 6 months!
Knowing how financial pros get paid is vital for smart decisions and transparent money partnerships. Whether you’re dealing with a realtor, mortgage broker, financial advisor, or money coach, understanding their payment methods lets you assess their advice clearly and align your goals with theirs. Be open about asking how the professional gets paid. It’s the best way to build a trustworthy, win-win connection.