The Fee-Only Advisor Model: What It Is and Why Your Advisor Should Be Using It

Do you know what you pay your financial advisor for every transaction you make? Does this affect your level of trust in them? Do you ever get the feeling you are being ‘sold to’ instead of being guided on a path to financial wellness? If you answered yes to any of these questions, you’re likely working with an advisor who uses a commission-based model. And guess what? You’re certainly not alone. In the history of the financial advising industry, commission-based has traditionally been the accepted way of doing business. In fact, it hasn’t been until the last few years that a new option has really started to come to the forefront.

Let’s face it: financial advisors get a bad rap. In fact, in a recent survey, 65% of those polled said they ‘mistrust a lot’ or ‘mistrust a little’ their advisors to act in their best interest. That means well over half of the people working with financial advisors think they are being led astray! That’s pretty sad.

It makes sense that advisors would choose a commission-based model because they simply don’t know any different. Most of them work for big firms and the firms dictate which model they use. Even some independent advisors still use the model because they think it’s the best way to build their business. However, it’s this tried and true way of thinking that is getting advisors into hot water and leading to the disruption that will cause a lot of them to go out of business.

So what’s the solution? In my experience, the absolute best way for a financial planner to work with clients is to use a fee-only model. This allows them to provide guidance and mentorship without always having that dollar sign hanging over their heads. But let’s back up a little and explain exactly what this model entails.

What is the Fee-Only Model?

A fee-only model involves no commission on the part of the advisor no matter what products they sell or recommend. It’s based on giving advice and the advisor is paid for the time they spend meeting with clients, researching the proper financial channels for each client, and making recommendations on financial decisions. Advisors get paid a flat fee regardless of how many or what type of financial products they sell.

Those who use a fee-only model can bill for hourly consulting, charge flat retainer fees, or charge based on assets under management. Many advisors will work with you and your unique situation to bill in a way that works for both of you.

Advantages of Fee-Only

There are numerous advantages to the fee-only model and why it’s instrumental to building trust with your advisor. Here are the top three.

No more quotas If you ever get the feeling you’re being pushed to buy a certain product because your advisor has a quota, you know how this affects your working relationship. Imagine the relief of knowing that your advisor has no quotas. Whether they sell you Product A or Product B (or no product at all!), they will still make the same amount of money. This is incredibly freeing as you can stop second-guessing every suggestion they make.

More trust with your advisor It’s difficult to truly trust your advisor when you know they’re making a commission off every product they sell you. When you pay a flat fee for financial advice, you no longer have to look at every recommendation with a skeptical eye. You know your advisor has your best interests at heart and that they will advise you to make wise decisions for your future and not their bank account.

Focus on value instead of sales The brokerage model sets up advisors to focus on sales first. That means providing value to you comes second if they have any time left over (and many of them don’t). When your advisor is fee-only, their only focus is on how to make you happy so you continue using their services. When the focus switches from money to value, everyone wins—especially you as the client.

Your relationship with your financial advisor should be built on mutual respect and trust—something that is virtually impossible with the traditional commission-based brokerage model. If you are looking for a financial advisor to partner with or believe it’s time to make a change, look for one that is fee-only. It could be the best decision you make for your financial future and well-being.


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Patrick Tucker, owner of True Measure Wealth Managementhas over 20 years experience in the industry and has spent the last 15 years learning the ins and outs of the fee-only advisory business. He focuses on client behaviors and what ‘wealth’ means for each individual client to provide caregiving plans that leads to a mindful fulfillment of financial goals. A lifelong learner, Patrick uses his continued knowledge to become a valued partner for his clients and help them explore the wisdom of true wealth.