feeonly

Fee-only is a compensation model used by some financial professionals in which the advisor’s income comes exclusively from fees paid by clients. Fee-only advisors do not receive commissions, soft dollars, or other compensation from product sales. This distinguishes them from fee-based advisors, who may earn both fees and commissions, and from commission-based advisors, who are mainly paid through selling financial products.

In practice, fee-only compensation can take several forms: hourly planning fees, fixed project fees, asset-based ongoing management fees, or annual retainer arrangements. Clients pay regardless of the specific investment products recommended, which is intended to align the advisor’s incentives with the client’s interests. In the United States, fee-only is often defined by the National Association of Personal Financial Advisors (NAPFA) as compensation exclusively from client-paid fees, with no commissions or sales loads. Many fee-only advisors are fiduciaries who must act in the client’s best interest, though duties and disclosures vary by jurisdiction and certification.

Advantages of the model include greater transparency, easier cost comparisons, and reduced conflicts of interest. Limitations can include higher costs for smaller portfolios and the potential that some services are not included in a standard fee. Prospective clients should review the fee schedule, the scope of services covered by the fee, and any additional costs such as brokerage or custodial fees to ensure clarity and alignment with their financial goals.