headshot of Thomas J. Brock, CFA, CPA
  • Written By
    Thomas J. Brock, CFA®, CPA

    Thomas J. Brock, CFA®, CPA

    Expert Contributor

    Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.

    Read More
  • Edited By
    Savannah Hanson
    Savannah Hanson, financial editor for Annuity.org

    Savannah Hanson

    Senior Financial Editor

    Savannah Hanson is an accomplished writer, editor and content marketer. She joined Annuity.org as a financial editor in 2021 and uses her passion for educating readers on complex topics to guide visitors toward the path of financial literacy.

    Read More
  • Updated: May 11, 2023
  • 6 min read time
  • This page features 2 Cited Research Articles
Fact Checked
Fact Checked

Annuity.org content is meticulously reviewed to ensure it meets our high standards for readability, accuracy, fairness and transparency.

Annuity.org articles are spellchecked, grammatically correct and typo-free. Annuity.org editors may revise content for clarity, logic, flow and meaning. Annuity.org only uses credible sources of information.

This includes reputable industry sources, select financial publications, credible nonprofits, official government reports, court records and interviews with qualified experts.

Cite Us
How to Cite Annuity.org's Article

APA Brock, T. J. (2023, May 11). Fee-Only Financial Advisor. Annuity.org. Retrieved June 8, 2023, from https://www.annuity.org/financial-advisors/fee-only/

MLA Brock, Thomas J. "Fee-Only Financial Advisor." Annuity.org, 11 May 2023, https://www.annuity.org/financial-advisors/fee-only/.

Chicago Brock, Thomas J. "Fee-Only Financial Advisor." Annuity.org. Last modified May 11, 2023. https://www.annuity.org/financial-advisors/fee-only/.

Why Trust Annuity.org
Why You Can Trust Annuity.org
Content created by Annuity.org and sponsored by our affiliates.

Annuity.org has been providing consumers with the tools and knowledge needed to confidently make financial decisions since 2013.

We accept limited advertising on our site to help fund our work, including the use of affiliate links. We may earn a commission when you click on the links at no additional cost to you.

The content and tools created by Annuity.org adhere to strict editorial guidelines to ensure quality and transparency.

Key Takeaways

  • When you hire a fee-only financial advisor, they get paid directly by you, the client, which means they don’t receive any compensation for recommending certain funds or insurance products.
  • A fee-only advisor is different from a fee-based advisor, who may earn kickbacks when their clients buy or invest in certain products or services.
  • It’s important that any financial advisor you work with is highly qualified and held to the standard of fiduciary duty so that they’ll have your best interests in mind.

What Is a Fee-Only Financial Advisor?

Fee-only financial advisors offer a variety of services to their clients in exchange for a fee. This fee can be structured as a percentage of the total assets they manage, an hourly rate or even a flat dollar amount their client agrees to pay.

If you work with a fee-only financial advisor, you should understand that they will receive 100% of their compensation from you, the client. This means that your fee-only advisor will not receive any commissions, referral fees or kickbacks from recommending certain investment funds or insurance products to you.

Role & Responsibilities

A fee-only financial advisor can provide help with budgeting, banking, managing debt or even optimizing insurance coverages. Their responsibilities will vary depending on your needs. 

If you start working with a fee-only financial advisor in a full-service capacity, expect them to spend a lot of time getting to know your financial situation first — including a review of your personal balance sheet (assets, liabilities and net worth) and the state of your budget.

Once they have a good grasp of your current finances, your advisor will help establish some short- and long-term financial goals and determine your tolerance for risk. They can also recommend any changes you need to make or avenues you can pursue to help reach your goals faster.

At this stage, your advisor will usually transition into a less intensive role, focusing more on managing your accounts and keeping you informed of any changes to the economy, legislation, or taxes that could affect your financial situation. They’ll also meet with you from time to time to ensure they still understand your financial goals, as those will likely change.

How They Differ From Other Financial Advisors

The main way to differentiate types of financial advisors is by looking at how they charge clients for their services. Understanding how an advisor charges for services is important, and it’s an easy way to tell whether or not they are held to the standard of fiduciary duty. We’ve already discussed fee-only financial advisors, who collect fees directly from their clients, but you may also encounter fee-based advisors in your research.

Unlike fee-only advisors, fee-based financial advisors are not required to act in a fiduciary capacity for their clients. This means that fee-based advisors can receive compensation not only from their clients but also from fund providers and insurance companies, too.

Let’s assume a fee-based advisor has an arrangement with a national life insurance company. In this hypothetical arrangement, the advisor gets paid a lucrative commission anytime a client purchases a whole life policy from the insurer. As you might assume, this arrangement creates a conflict of interest, making it far more likely that the advisor will recommend this life insurance product to their clients — even though it may not be in their clients’ best interests.

Contrast this with fee-only advisors, who have an obligation to put their clients’ interests first and will never maintain third-party relationships that threaten their fiduciary duty.

Essentially, a fee-only advisor is legally and ethically committed to always acting in your best interest. They will never steer you to purchase unnecessary products that don’t align with your financial objectives or your tolerance for risk.

Costs Associated With Fee-Only Financial Advisors

Fee-only financial advisors can bill their clients in a variety of ways, but most will charge a percentage of the total dollar amount of investments they manage. This type of fee structure is commonly referred to as the assets under advisory (AUA). Generally, you can expect to pay an annual advisory fee of 1% on assets of $1 million or less. For investment portfolios larger than $1 million, you should aim for an annual advisory fee of less than 1%.

Other types of fee structures may include hourly or flat-dollar rates for certain services. For example, a fee-only advisor could charge their client a fixed dollar amount for creating a budget, a separate fee for negotiating a large debt and another fee for setting up a retirement plan. 

Rates can vary widely among fee-only advisors. It’s always best to shop around for the most competitive rates when choosing a financial advisor, but rates aren’t the only thing you should focus on.

When Is a Fee-only Financial Advisor the Right Choice?

It’s generally recommended to go with a fee-only advisor rather than a fee-based advisor, as a fee-only advisor is held to a fiduciary standard and will keep your best interests in mind. This is especially important for high-net-worth individuals, who entrust their advisors with a substantial amount of their wealth.

If you have a large amount of money, a fee-only advisor is in a good position to provide you with guidance over the long term. You will need someone dedicated to preserving and growing your wealth over time, while also guarding your wealth against economic risks that may pop up.

But if you don’t need the full services of a financial advisor over a long period of time — and you fully understand the conflicts of interest that come with a fee-based advisor — you may find it more affordable to go with a fee-based advisor.

Pros and Cons of Fee-Only Financial Advisors

The biggest advantage of fee-only financial advisors is their transparency. Fee-only advisors receive payment directly from their clients, and they never receive any money from third parties for recommending certain products or services. This transparency implies a fiduciary duty, but always get them to confirm this standard verbally or on paper.

Because fee-only financial advisors must comply with legal standards and face more regulatory scrutiny than fee-based advisors, the quality of their work is generally also higher.

As for disadvantages, the biggest one is that fee-only advisors often charge higher fees than fee-based advisors. This is because fee-based advisors can generate revenue in other ways, so they can afford to charge lower rates. Another drawback of fee-only advisors is that they will typically offer a smaller range of services to their clients.

How To Find a Fee-Only Financial Advisor

For help with finding a fee-only financial advisor, the best place to start is the CFP® Board, a non-profit organization that sets and enforces standards for the highly respected Certified Financial Planner™ (CFP®) certification. All CFP® professionals are held to the standard of fiduciary duty, which sets them apart from other advisors who are potentially less trustworthy.

Locate a few CFP® professionals in your area. Meet with them virtually or face-to-face and take your time getting to know them. The best advisors will put you at ease with a high degree of professionalism, transparency and empathy. 

During your initial meetings, ask each advisor to talk about their CFP® certification and the fiduciary standard. Have them explain to you why those standards are important. This will give you a good idea of how they work and whether they’ll keep your best interests in mind.


Connect With a Financial Advisor Instantly

Our free tool can help you find an advisor who serves your needs. Get matched with a financial advisor who fits your unique criteria. Once you’ve been matched, consult for free with no obligation.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: May 11, 2023

2 Cited Research Articles

Annuity.org writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Certified Financial Planner Board of Standards Inc. (2023). Find a CFP Professional. Retrieved from https://www.letsmakeaplan.org/find-a-cfp-professional
  2. Corporate Finance Institute. (2021, November 8). Fiduciary. Retrieved from https://corporatefinanceinstitute.com/resources/wealth-management/fiduciary/