When it comes to managing personal finances, many don’t have the time, expertise, or inclination to handle it all by themselves. Finances can be a confusing and intimidating topic, especially for those who have limited knowledge in this field.

This is where a financial advisor or financial planner comes into the picture, providing valuable guidance in managing your financial life. However, with many types of financial advisors out there, it can be tough to know who will have the best interest of their clients in mind as well as their assets. One category of advisors that is gaining popularity is “Fee-Only” advisors. If you’re considering a fee based financial planner or advisors, it’s important to understand their value proposition and why they may or may not be the best fit for you and your investments.

What are fee only advsirs?

What are fee only advsirs?

Fee-Only Advisors Defined

Fee-only advisors are financial planners who are compensated solely by the fee they charge their clients for their services. They don’t receive commissions, referral fees, or any other sort of kickback from the sale of the products they recommend.


Fee-Only vs. Commission-Based

Fee-only financial planners are not the same as commission-based advisors. Commission-based advisors charge clients for the products they sell to them, such as mutual funds or life insurance policies. Whenever they sell a product, they get a commission, which incentivizes them to recommend products that provide the highest commission rather than those that may be the best fit for the client. Since they are not restrained by the same regulations that fee-only advisors are, they often have a higher standard to meet when it comes to client loyalty.

What are the Advantages of a Fee-Only Financial Advisor?

As you look to work with any type of personal financial advisors understanding the pros and cons of each is critical. From a fiduciary responsibility to understanding the financial products a financial professional is offering can make all of the difference in helping you decide what fee only financial planner or advisor has your best interest in mind.

No Conflicts of Interest

One of the biggest advantages of fee-only planners is that they should not have conflicts of interest. Commission-based advisors often receive compensation for recommending certain financial products which may not be in the best interest of their clients. Meanwhile, fee-only advisors do not receive any compensation based on the investments they recommend. This ensures they are only recommending investments that best suit the needs of their clients.


As opposed to commission-based advisors, fee-only financial advisors are generally more transparent about their fees. Commission-based advisors often receive compensation in hidden fees and commissions, making it difficult for clients to determine the true cost of their services. Fee-only advisors, however, are typically transparent about fees and provide clients with clear and easy-to-understand fee schedules.

Fee-only advisors, on the other hand, do not receive any compensation from investment products

Fee-only advisors, on the other hand, do not receive any compensation from investment products

Objectivity of Investments

When it comes to investing, objectivity is important as you don’t want a financial planner pushing a product just because they receive a financial incentive. That said, fee-only financial advisors are usually more objective than commission-based advisors.

Commission-based advisors may be influenced to recommend certain investment products because of the compensation they receive. Fee-only advisors, on the other hand, do not receive any compensation from investment products, which ensures their recommendations are solely based on their client’s best interests.

Holistic Approach

It’s been said that fee-only financial advisors take a more holistic approach to financial planning than their commission-based counterparts. They look at their clients’ entire financial picture, including income, assets, and liabilities, to provide them with more comprehensive financial planning advice. Commission-based advisors, however, may focus solely on investments and neglect other areas of financial planning.

Fee Only advisors act in their clients best interest.

Fee Only advisors act in their clients best interest.

Fiduciary Duty

Like a registered investment advisor, a fee-only financial advisor has a fiduciary duty to act in their client’s best interests. This fiduciary standard means they are legally obligated to provide their clients with advice that is in their best interests.

Time-Saving and Stress-Reducing

Investing can be time-consuming and stressful if you’re unsure where to start. With fee-only advisors, you’re working with someone who can help manage that burden for you. They’ll help to handle the research, monitoring, and decision-making, leaving you with more time to focus on other important aspects of your life. They can also help alleviate the stress that comes with investing, providing reassurance that investments are being managed smartly.

The Disadvantages of Working With a Fee-Only Advisor

As with everything in life, there are usually some drawbacks to balance out the advantages, and a fee-only advisor is no different. From limited services to high fees, working with a fee based financial advisor can have its drawbacks.

Limited Services

One of the most significant limitations that comes with fee-based advisors is the limitation of their services. The fees they charge for their advice only cover specific investment areas, such as financial planning services, investment advising, and portfolio management.

Suppose an individual requires help with retirement planning, income and tax planning, estate planning, or portfolio implementation. In that case, they might have to pay additional fees or reach out to a different advisor, such as a registered investment advisor. It can be a hassle to work with multiple financial advisors, and it can also lead to confusion and contradicting advice.

Working with a fee only advisor can mean higher fees.

Working with a fee only advisor can mean higher fees.

High Fees 

Though fee only financial advisors do not earn commissions from investment products or financial transactions, they charge high retaining fees. The rates typically start at one percent of assets under management and can go up to two or three percent.

Suppose an individual can manage their investments themselves and achieve the same returns as a fee-only advisor. In this case, it may not be practically and financially optimal to hire one. It can potentially affect investment returns and long-term wealth accumulation, yielding the opposite outcome of what an investor intended.

Bias Towards Fee-Only Products

Like commission-based advisors, a fee based advisor may have a bias toward certain other investment management products, which may lead to a conflict of interest. Advisors earn fees from their advisory services, so they need to recommend investment options that will help them secure long-term contracts with their clients. This means they may suggest investment products from companies with which they have a business relationship, even if the options are not best suited for their clients.

Unfamiliar with Certain Assets 

Working with this type of financial advisor means working with an individual who mainly specializes in financial planning and investment advising. Still, it does not make them experts in all investment options. This means they may not know or fully understand complicated assets such as hedge funds, private equity investments, or direct real estate. For those with these types of investments in their portfolio, a fee-only advisor may not be suitable, and it may be wise to look for alternative financial advisory.

Limited Accessibility and Convenience 

Many fee-only advisors prioritize their high-net-worth clients, who may serve as a primary source of their income. This means individuals with smaller portfolios or lower net worth may not receive the same level of service and attention. Additionally, fee-only advisors often operate with a small team and may not be available in emergencies. This can be problematic during market downturns or if an investment requires immediate action.

If you're considering working with a fee only advisor be sure to understand the pros and cons.

If you’re considering working with a fee only advisor be sure to understand the pros and cons.


For any individual looking into starting the planning process or to better understand their financial goals and investments, working with a financial advisor can be an important step in the process. They can help you adjust to the complexities of managing your personal finance, assist in making financial decisions or create a holistic financial plan that works in their client’s interest.

Among the many different types of financial advisors, fee-only advisors offer a results-driven approach focusing on transparency, integrity, and trustworthiness. By providing conflict-free advice and investing options, they can help to earn the trust of investors looking for a long-term vision for money management that is tailored to reflect their personal goals.

As with any important decision, it’s crucial to do your research, assess your financial situation, and evaluate your priorities before deciding if a fee-only advisor is the best course of action for you.

As a member of Planning Made Simple, resources are available to help members understand the importance of having a financial plan, how to diversify their investment portfolio or why it’s beneficial to work with a financial advisor. Members also are paired with a Planning Made Simple certified financial planner or coach who can offer comprehensive advice and guidance. If you’re not a member, discover the benefits of becoming one today.