Cottage Street Advisors operates to an independent fiduciary standard for clients!
Rather than charge a commission on a product we sell or share revenue from companies that pay us, we offer independent advice and investment management for a fee. It's very transparent.
Many people pay a broker or an agent a commission for a financial product such as a mutual fund or life insurance product that you purchase through them. Many people also pay sales loads and management fees to investment management companies for their mutual funds and other financial products which can be very high and erode returns over time.
There are many different commission and fee structures, but often a commission is paid indirectly through some sort of fee sharing arrangement -- that is, rather than taking the entire fee for themselves, an investment company shares some of the fee they receive from you with the broker or agent. Other companies may charge a sales load or above average management fees.
It can be very difficult to fully understand exactly what you are paying and to whom when fee structures aren't transparent.
A potential issue of not having a fiduciary as your advisor is the misalignment of interests between the person selling the product for a commission and you, the client. Brokers selling a product for commission often have an incentive to sell more products to make more money. Or they may sell you something that they receive a commission on when there is a very similar, less expensive alternative. Those competing interests may lead someone to sell you a product that may not necessarily be in your best interests.
Independent, fee only, advisors are held to the fiduciary standard and must act in your best interest at all times. That doesn't necessarily mean buying you the products with the lowest cost or lowest fees. It means making the best possible recommendation given many potential factors in addition to cost, such as service, liquidity, business risk and suitability among others.
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