Home Breadcrumb caret Practice Breadcrumb caret Planning and Advice 3 tips to explain compensation When explaining compensation, follow these three simple steps to ensure you cover all bases. By Suzanne Sharma | December 23, 2013 | Last updated on December 23, 2013 1 min read When explaining compensation, follow these three simple steps to ensure you cover all bases. 1. At the first meeting Have an open discussion where you lay out the facts before anyone makes commitments, says Doug*, a Calgary-based advisor. Tell your client she’ll be charged X% of all assets she has at your firm, and stress this sum is charged every year. Or, if you’re paid using trailers, explain that part of the MER goes towards your commission. Break down how that covers fees for third parties (i.e., portfolio managers), as well as the firm. Explain that the percent amount also includes your compensation for services rendered. Don’t forget to outline commission structures for any insurance you sell 2.If your client is surprised Ask what her concerns are. Go over the fee structure again, including who is paid what (e.g., firm and portfolio manager fees). Suggest less expensive alternatives—perhaps that she should switch to a passive portfolio, which requires less management and, therefore, reduces costs. 3.At the annual review Discuss how the portfolio has performed, where her assets stand and, as a result, what her total costs are. Read more: Gifts for travellers> Suzanne Sharma Save Stroke 1 Print Group 8 Share LI logo