Fee-only vs fee-based advisors: what's the difference?
The two terms sound alike but describe different compensation models — and different potential conflicts of interest.
Fee-only and fee-based are the two most common ways advisers describe how they are paid. The one-word difference matters.
Fee-only
A fee-only adviser is compensated only by its clients — typically a percentage of assets under management, a flat fee, or an hourly rate. They do not earn commissions, which removes a common source of conflict of interest.
Fee-based
A fee-based adviser charges client fees but may also earn commissions from selling certain products, such as insurance or annuities. This is not inherently bad, but it introduces incentives you should understand. Ask how the firm is compensated on any product it recommends.
Put this into practice
Every firm profile on AdvisorGrade shows real, sourced fiduciary status, fees, and disclosure history from SEC filings — so you can check everything above in a couple of clicks.