Understanding Fee-Only Advisors
Fee-only financial advisors charge directly for their services without earning commissions on products they recommend. This structure aligns their interests with yours—they get paid the same regardless of which investments you choose.
How Fee-Only Differs from Commission-Based
Commission-based advisors earn money when you buy certain products. This creates potential conflicts of interest. Fee-only advisors have no incentive to recommend expensive products over cheaper alternatives that might serve you better.
Common Fee Structures
Fee-only advisors typically charge one of three ways: a percentage of assets under management (usually 0.5-1.5%), hourly rates ($150-400 per hour), or flat fees for specific services. Each structure suits different client needs and portfolio sizes.
Finding Fee-Only Advisors
The National Association of Personal Financial Advisors (NAPFA) and Garrett Planning Network maintain directories of fee-only advisors. These organizations require members to commit to fee-only compensation. Check credentials and verify fee structure directly.
Questions to Ask
Ask potential advisors exactly how they get paid. Request a written fee schedule. Inquire about any business relationships that could create conflicts. Understand whether they act as fiduciaries legally required to put your interests first.
Is Fee-Only Right for You
Fee-only advice makes sense when you want unbiased recommendations, have a complex financial situation, or distrust commission-based sales. The cost may seem high, but avoiding unsuitable products often saves money long-term.
