Fee-only vs fee-based financial advisor: what is the difference?
Short answer: A fee-only advisor is paid only by clients (for example an AUM, flat or hourly fee) and does not take commissions. A fee-based advisor charges client fees and may also earn commissions on products such as insurance or annuities. The names sound alike, so confirm how an advisor is paid in their Form ADV and Form CRS.
Side by side
| Fee-only | Fee-based | Commission-based | |
|---|---|---|---|
| Paid by | Clients only | Clients and product providers | Product providers |
| Commissions | No | Possible | Yes |
| Typical registration | Investment adviser | Often both adviser and broker | Broker or insurance license |
Why does it matter?
Commissions can create a conflict of interest, because pay depends on the product sold. Fee-only removes commissions but has its own incentives (an AUM fee grows when assets stay with the advisor). Neither label replaces asking how the advisor is paid in dollars.
How do you check?
- Read Form CRS: it states how the firm and its professionals are paid and their conflicts.
- Read Form ADV Part 2A, Item 5 (fees and compensation).
- Look the advisor up on IAPD and BrokerCheck; a broker registration means commissions are possible.
- Ask: “Do you or your firm receive any compensation from anyone other than me?”
Get matched with a financial advisor
Answer three quick questions. We match you with advisors whose services and minimums fit.
Find fee-only financial advisors and fiduciary financial advisors, see how financial advisors get paid, or estimate costs with the fee calculator.
Frequently asked questions
What is a fee-only financial advisor?
An advisor paid only by clients, through AUM, flat, retainer or hourly fees, with no commissions.
What is a fee-based financial advisor?
An advisor who charges client fees and may also earn commissions on products they sell.
Is fee-only better than fee-based?
Fee-only removes commission conflicts, but every pay model has incentives. Compare total cost, services and fiduciary status.
How can I tell if an advisor is fee-only?
Check Form CRS and Form ADV Part 2A Item 5, look for broker registration on BrokerCheck, and ask directly.
Tell us what you need and we will match you with professionals that fit. It is free, and you decide who to talk to.
Related on Sam’s List
Some professionals on Sam’s List pay for visibility or leads. Inclusion and order do not rank professionals. This page is general education, not investment, tax, or legal advice, and it does not recommend any adviser, product, or strategy. Check any professional on Investor.gov and FINRA BrokerCheck before you hire. Firm names are never shown on Get a quote matches.