Stockbrokers and investment advisors are generally paid in three different ways.

Commission: Investors may be charged a commission on the trades they make. This commission requires investors to pay a percentage of every order; for example, the commission might be eighty basis points per trade (0.8 percent of each trade) or a specific charge per trade, such as $29.99 for a trade of one thousand shares.

Assets under management: Investors may be charged a percentage of the value of assets that are under management. For example, if you have a $500,000 portfolio, and the advisor’s fee is 1 percent per year, you will pay the advisor $5,000 per year for helping you manage your portfolio.

Combination pay: Stockbrokers and financial advisors may charge fees that are a combination of both commissions and assets under management.

Regardless of who you work with, it is important that you know how the individual or institution is compensated. If individuals or institutions are unwilling to share this information with you, find someone who will. There are many excellent, qualified brokers and investment advisors who make compensation arrangements a part of every meeting with clients.

Generally, you must work with brokers/investment advisors if you are buying and selling stocks, bonds, and some mutual funds with loads or sales charges. If you wish to purchase stocks, bonds, or load mutual funds, you will need to work with a broker.

If you only want to purchase nonload mutual funds and treasury bonds you can buy most of these directly from the mutual fund company without cost or from some brokers also without cost. You can buy some U.S. Savings bonds and treasury securities directly from the U.S. Treasury via www.treasurydirect.gov.