Written By: Allan Slider

Updated: December 4, 2023

Did You Search for a “Fee-Based” Financial Advisor? You Really Want “Fee-Only”.

Fee-Based financial advisors and Fee-Only financial advisors are very different across multiple aspects stemming from how they are compensated.  The difference is significant, and confusing by design.

Consumers are seeking out advisors that are fee-based when they are really intending to find a fee-only financial advisor.  The two compensation methods are not interchangeable. How your financial advisor is compensated may ultimately affect the financial planning advice you receive, and how your investment portfolio is constructed and managed.

Allan Slider, founder of FeeOnlyNetwork

Understanding Fee-Based vs. Fee-Only

In general, there are three types of fee structures that an advisor can build their business on:

  • Fee-only
  • Commission-only
  • Fee-based, which is a combination of the two

Fee-only and fee-based sound very similar, so it can be confusing for investors who are searching for a financial advisor. This confusion comes because advisor fees seem to be relatively straightforward from a consumer’s perspective: they think advisors are either compensated through commissions or from the fees paid by clients. But there’s an additional layer of complexity to advisor compensation: the fee-based advisor.

Fee-based advisors are compensated by the fees their clients pay … but they are also compensated with commissions from the sale of financial products. Their income is “based” on fees, but it’s not solely from fees.

What aspects of the advisor / consumer relationship are affected?





Only receive fees directly from clients. Do not earn commissions or referral fees from selling financial products like annuities, insurance, or mutual funds – without exception.

Earns fees from clients but may also receive commissions and other compensation for selling financial products, such as insurance or investment products.

Fiduciary Duty

Legally required to act as fiduciaries, putting clients’ best interests first – at all times.

Fiduciary duty may vary; they are typically required to act in a client’s best interest when providing advisory services but not necessarily when selling products.

Conflicts of Interest

Fewer conflicts of interest, as they are not incentivized to recommend products for commissions.

Potential conflicts of interest exist, as they may earn commissions for selling certain financial products.

Range of Services

Primarily provide financial planning focused services. May also implement investment strategies and manage portfolios.

Offer a wider range of services, including financial planning, investment management, insurance, and the sale of financial products.

Transparent Pricing

Typically transparent about their fee structure, charging either hourly fees, flat fees, or a percentage of assets under management (AUM).

Fee structure may be less transparent, as they may earn both client fees and commissions, making it important for clients to understand all costs involved.


Often perceived as more objective, as they are not influenced by commissions and sales quotas.

Objectivity may be influenced by the potential for commissions and product sales.

Regulatory Oversight

Regulated by the SEC (U.S. Securities and Exchange Commission) and must adhere to the Investment Advisers Act of 1940.

Also regulated by the SEC but may be subject to additional rules and regulations due to their sales activities.

Client-Centered Approach

Typically focus solely on client needs and financial goals.

May prioritize product sales or commission-generating activities to some extent.

Payment Flexibility

Fees are paid directly by clients, providing a clear understanding of the cost of services.

Clients may pay fees as well as incur additional costs related to financial products, which can be less transparent.

Potential Cost Savings

May result in cost savings over the long term due to reduced conflicts of interest and lower product costs.

May involve higher overall costs for clients due to commissions and product-related fees.

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About The Author:

Allan Slider

Allan Slider is the Founder of, a one-of-a-kind digital platform that elevates the visibility of fee-only financial advisors, individually and collectively. Fee-Only advisors are ONLY compensated by the client and NEVER make commission by selling financial products, or receiving kickbacks from brokerage firms. Allan is a consumer & investor advocate and a 20+ year veteran of online marketing for financial advisors.

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