Is your adviser charging you both a commission and a fee? This practice of receiving compensation from two sources is not necessarily illegal but is a question of ethics and a grave one at that.

Recently this came to my attention when I sat down with a prospective client who was with an adviser at a large well-known bank (I will save that investment company the embarrassment). The adviser has been collecting a fee on the investor’s portfolio and receiving commissions from the mutual funds held within the portfolio. Apparently, this is common practice at this company. The adviser shouldn’t be allowed to “double-dip” by collecting both commissions from the mutual funds and fees from your overall portfolio.

One of the most important questions to ask your adviser is… “How do you get paid?” This is a question that some advisers would rather avoid. Tell them you want to know each and every source of compensation. If he says something that doesn’t make sense, keep asking questions; this is your money. If you feel you are not getting a straight answer, it’s probably time to move on.