What is a fee-only model?


A fee-only model refers to advisors that are compensated solely for their advice and time. They do not accept any commissions based on the product that they sell.

Why Fee-Only Matters


Fee-only advisors put the client's interest first. Unlike commission-based advisors, their compensation is not influenced by commissions. Commission-based advisors may encourage their clients to buy certain products that may be more expensive when cheaper alternatives exist because they profit from those sales.






Fee-Only versus Commission-Based Advisors



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Advisor Type

Fee-Only: Typically advisors that have a legal fiduciary obligation to act in their client's best interest.

Commission-Based: Often used by brokers who act as salesmen. They have no fiduciary obligation.

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Compensation

Fee-Only: Compensated through a flat fee, hourly rate, or a percentage of assets under management.

Commission-Based: Paid by the client but also compensated based on the products they sell.

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Conflicts

Fee-Only: Conflicts of interest do not exist because advisors do not profit from the products they recommend or sell.

Commission-Based: Conflicts of interest are more likely to exist.

Next time you see a financial advisor, ask the question:

"Are you a fee-only advisor?"


View Fee-Only Advisors