My current financial advisor is billing monthly; is that common?

My current financial advisor is billing me monthly. It is broken down from 1 percent of my holdings yearly split into 12 months. Is this a normal way to be charged? I send him a check monthly. I want to make sure I am not being taken advantage of.

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April 2018

What terms did you agree to when you initiated your relationship with your financial advisor. The typical management fee is paid quarterly and it is usually deducted directly from your account through accumulated cash dividends, interest or cash allocations in your account.

A one percent fee sounds fair although there are times when not paying a fee and instead paying commissions on each trade works to the client's advantage depending on how active your account activity is and also on the type of investments you own. There has been concern amoung regulators for financial advisors charging an ongoing fee for an asset that they truly are not able to manage due to the nature of the investment. It is known as reverse churning which is the placement of clients in a fee based account when their account activity demonstrates that they would be better served by being in a commission transaction fee based account. 

It is not fair to place a customer in an account with a fee structure that reasonably can be expected to result in a greater cost than an alternate account. If you have ever been in a fee based account during an extended bear market then the only one making money is your financial advisor when you are actually experiencing diminishing returns.

April 2018
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April 2018