Advisor Fee

DEFINITION of 'Advisor Fee'

The fee that is paid to a financial advisor for recommending a load mutual fund based on the needs and time-frame of an investor. Fees differ according to the class of mutual fund shares, and are paid to the advisor for recommending a fund that suits an investor's time and goals. Depending on the share class, advisor's can either receive a one-time fee up-front or an annual fee as long as the investor holds the asset.

BREAKING DOWN 'Advisor Fee'

The fee that an investor pays on A shares is upfront, starting at around 4-5% and decreases as more is invested. An investor with a large amount to invest over the long-term would be best suited with A shares. An investor with the same time-frame, but less to invest might do better in B shares. C shares are best for those investing for the short-term. Note that 12b-1 fees, the fees paid to a mutual fund's management, are higher for B and C shares, and lower for A shares. When choosing a class of shares, an investor should consider first how long they can invest. The advisor will get paid either way for directing you into the investment.

Also, investors who already have a fund picked out should pick a no-load fund, sidestepping the extra fees. The load goes to pay for the advice of the advisor. If that advice is not needed, don't pay the price for it.

RELATED TERMS
  1. Load Fund

    A mutual fund that comes with a sales charge or commission. The ...
  2. Exchange Fees

    A type of investment fee that some mutual funds charge to shareholders ...
  3. Advisor

    1. The person or company responsible for making investments on ...
  4. Level Load

    An annual charge deducted from an investor's mutual fund assets ...
  5. 12B-1 Plan

    A no-load mutual fund that is allowed to use fund assets to pay ...
  6. Cumulative Discount Privilege

    A way that an investor in a mutual fund can qualify for lowered ...
Related Articles
  1. ETFs & Mutual Funds

    How Mutual Fund Companies Make Money

    Read about the many different kinds of fees and sales charges mutual fund companies can use to generate revenue from those who invest in their shares.
  2. ETFs & Mutual Funds

    Selling Mutual Funds: What Happens When You Liquidate?

    Learn about the hidden costs that can be triggered when you redeem mutual fund shares. Even no-load funds have fees and expenses you may not know about.
  3. Financial Advisor

    Investment Fees: How to Understand Them

    There can be a variety of fees levied when investing. Here's a look at what they are and how to manage them.
  4. ETFs & Mutual Funds

    Trading Mutual Funds For Beginners

    Learn about the basics of trading and investing in mutual funds. Understand how the fees charged by mutual funds can impact the performance of an investment.
  5. Financial Advisor

    What Hiring a Financial Advisor Costs in 2016

    When it comes to the price tag on a financial advisor's services, transparency is often lacking. That's why it's important to do your homework.
  6. Financial Advisor

    How To Optimize Your Portfolio and Reduce Fees

    Investment fees aren't avoidable altogether, but there are strategies investors can employ to keep those fees at bay and reduce the impact on returns.
  7. Financial Advisor

    5 Signs Fund Fees Are Hammering Your Investments

    The worst long-term killer of investment gains isn’t the market; it’s fees, especially for retirement accounts. How do you know if you're paying too much?
  8. ETFs & Mutual Funds

    Are Mutual Funds Doomed?

    Decreases in mutual fund classes and the growing use of ETFs means the future of mutual funds will be anything but smooth.
  9. ETFs & Mutual Funds

    The Lowdown On No-Load Mutual Funds

    These funds let you cut out the middleman - and the fees.
  10. ETFs & Mutual Funds

    A Guide For Picking Long Term Mutual Funds

    Learn about considerations for investors when buying shares in a mutual fund for a long-term investment, including fees, type of management and portfolio goals.
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center