Financial Advisors that are Fee-Only are paid directly for their services by their clients. They can be paid either as a percentage of assets they manage, a fixed planning fee, or hourly fees. Fee-Only planners are only paid from their clients. They can charge a one-time fee or an ongoing fee for their services.
Fee-Only advisors have fewer conflicts of interest because they are only paid by the client and their interests are aligned with the client. They only worry about the client’s needs as a result. Fee-Only advisors cannot accept any compensation because of product sales and therefore makes working with them more transparent for clients.
Fee-Based financial planning may sound like Fee-Only but is significantly different. The main difference is that Fee-Based advisors can accept commissions from financial products, annuities, and insurance products that they sell their clients. There tend to be a lot of conflicts of interest for the financial advisor. Fee-Based advisors may do some fixed fee planning but also sell commission-based products alongside the planning fee. There tends to be less transparency with Fee-Based advice.
*Davis Private Wealth is a Fee Only Financial Planning firm in Wellington, Florida. As a Registered Investment Advisory firm, we have a fiduciary duty to all of our clients.