February 27, 2015

What is the difference between a fee-based financial advisor and a fee-only financial advisor?

3 thoughts on “February 27, 2015”

  1. Garrett Haag says:

    The only real similarity between the two is that they have fee in the name and deal with money. A fee based financial adviser is a sales person for a brokerage house. They do not need to sell you the best products for you, they just need to sell you something that is suitable for you, which could be anything. Fee based have a huge conflict of interest. They want to sell you the thing that makes them the most money. A fee-only planner is legally looking out for your best interest. They have a fiduciary responsibility. They charge an hourly rate or a % of the money under management. They do not have a conflict of interest because they do not get a commission on what they get you. Not all fee-only advisers are created equal, you need to do some research in to them before going with them still. The best thing to do is to manage your own money and own index funds at Vanguard but that may not be an option for all.

  2. Elizabeth Barske says:

    Fee only financial advisors only accept fees that are paid directly to them from their clients and no other compensation is charged for their services. Fee based financial advisors are paid by the fees from their services plus commissions from financial products recommended or sold. However, because not all financial products pay a commission, there is a conflict of interest in what products they are recommending and selling you, and you can bet that it’s more likely to be the ones that they can make money off of, money that comes off of the top of your earnings. Fee based financial advisors do not generally have your best interest in mind, so when looking for financial advice, look for a fee only advisor.

  3. Mike Finley says:

    Great answers. I have nothing to add. Well done!

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