Marcus P. Miller, CFP®
Fee-Only vs. Fee-Based Financial Advisors: Read the Fine Print
When it comes to finding a financial advisor, it’s important to know your options and understand the differences between fee-only and fee-based advisors. While both types of advisors can provide sound advice on managing your money, there are a few key differences that investors should be aware of before making their decision.
What is a Fee-Only Financial Advisor?

Fee-only financial advisors charge an hourly rate or a flat fee for their services, and do not take commissions on any products they may recommend. This means that the advice they offer is untainted by potential conflicts of interest. They build their business around transparency and client trust, so you can rest assured that you’re getting unbiased advice from an experienced professional.
Fee-only advisors charge in a variety of ways, such as:
1. Flat fees for financial planning services
2. Hourly fees for specific advice or consultations
3. Project-based fees for creating a financial plan based on your goals and objectives
4. Retainer fees for regular meetings with the advisor to review progress and adjust strategies as needed
5. Management fees based on a percentage of assets under management
At Mainstay Capital, we’re proud to be a fee-only firm. We provide comprehensive wealth management services for a flat fee that is easily calculated on a handheld calculator. This makes it easy to know exactly how much you’ll pay for our services, and ensures that you get the best advice without worrying about hidden fees or conflicts of interest.
What is a Fee-Based Financial Advisor?
On the other hand, fee-based advisors are able to charge commissions and use hidden fees to increase their compensation. Unfortunately, this type of advisor might not have your best interests in mind when providing advice. They use the term “fee-based” because it sounds similar to “fee-only”—but don’t be fooled! The term “fee-based” doesn’t actually communicate anything about how they charge for their services. In other words, it's inherently misleading.
Fee-based advisors charge in the following ways:
1. Commissions on products they sell
2. Management fees based on a percentage of assets under management
3. Transaction fees for every trade or investment
4. Performance bonuses based on how well their clients’ portfolios perform
5. Advisory fees for providing personalized financial advice and services
6. Investment consulting fees
7. Administrative fees for maintaining client accounts and paperwork
In the early stages of a relationship, it can be hard to figure out just how expensive all those charges may end up being. To make matters worse, these fees might even be hidden in the price of their bundled products, so you have no idea what you're actually paying for.
When choosing a financial advisor, it pays to read the fine print and ask questions about how they get paid—this can help you make sure you're getting honest advice from someone who has your best interests at heart. As Warren Buffett once said: "Someone's sitting in the shade today because someone planted a tree a long time ago." With any luck, that person will have found an honest and reliable financial advisor who provided transparent charging practices. By understanding the difference between fee-only and fee-based advisors, investors can have peace of mind knowing that their money is in good hands with someone who truly has their best interests at heart.
As an investor, you are probably quite aware of the importance of hiring a suitable financial advisor. To assist in this process, we have compiled a checklist that can be used as guidance when interviewing prospective advisors before making your final decision.
Financial Advisor Interview Checklist
1. How do you get paid? Are your fees transparent and straightforward?
2. Do you offer fee-only services or do you also receive commissions for products that you recommend?
3. What kind of financial planning services do you provide?
4. Do you have any specializations such as retirement planning, estate planning, tax planning, or investment management?
5. Are you a fiduciary who is legally obligated to act in a client's best interests?
6. Are you required to carry professional liability insurance for any services provided?
7. How much experience do you have in the financial services industry?
8. What type of financial planning process do you use?
9. Can I speak with some of your past or current clients to get an idea of their experience working with you?
10. Do you belong to any professional organizations such as the Financial Planning Association, Certified Financial Planners Board of Standards, or The National Association of Personal Financial Advisors?
11. What is your fee structure and what services are included for that fee?
12. Are there any additional fees for services outside of the basic financial planning package?
13. Do you offer any guarantees or refunds if I am not satisfied with the service provided?