What is a fee-only financial advisor?

1 min readLast updated January 24, 2024by Unbiased team

Fee-only financial advisors typically accept fees instead of commissions as compensation when advising clients on financial matters; this guide looks at the pros and cons of using a fee-only financial advisor.


  • Fee-only financial advisors are typically client-centric fiduciaries. 

  • Their fee structure is transparent and generally based on assets under management. 

  • Some fee-only financial advisors charge an upfront fee for consultations. 

Fee-only vs commission-based: what are the compensation models for financial advisors? 

Financial advisors are compensated through various models, with fee-only and commission-based primary approaches.  

In a fee-only financial advisor model, advisors charge clients directly for their advice and services, either a percentage of the client's assets under management (AUM) or a flat rate. This structure aligns with the client's financial goals, as no commissions are tied to product sales. 

On the other hand, commission-based advisors receive compensation through commissions earned on the financial products they sell, like mutual funds or insurance policies. This model may create potential conflicts of interest, as advisors could prioritize products that generate higher commissions. 

The key distinction between fee-only vs. fee-based financial advisors lies in how advisors are paid: fee-only emphasizes transparency and client-centric services, while commission-based involves earning fees through product sales, potentially influencing recommendations. 

What is a fee-only financial advisor? 

A fee-only financial advisor is a finance professional who exclusively earns compensation directly from clients through fees.  

They do not receive commissions or incentives from the sale of financial products. 

How much does a fee-only financial advisor cost? 

The cost of a fee-only financial advisor will vary based on the advisor's credentials, experience, services, and the complexity of the client's financial situation.  

Generally, fees are structured as a percentage of AUM, with an average range of 0.5% to 2% annually. However, a recent study revealed that the average AUM fee for a client with $1 million in assets is 1.02%

Some advisors may charge hourly rates ranging from $150 to $400, while flat fees for comprehensive financial planning could range from $1,000 to $10,000 or more.  

The specific fee arrangement is typically negotiated between the advisor and the client in advance, ensuring a transparent and customized approach to financial advice. 

Clients should request full disclosure of the fees in advance, and the costs should be reassessed annually. Additionally, it helps to know the total expenses expressed in dollars and the percentage to understand the total fees better. 

What are the advantages and disadvantages of a fee-only financial advisor? 

Using the services of a fee-only advisor has its pros and cons. Some of these include: 


  • Objective advice: A fee-only payment model eliminates conflicts of interest as the advisor's compensation is not tied to product sales or commissions, fostering unbiased recommendations. 

  • Transparency: Clients have a clearer understanding of the fees they pay, promoting openness and trust in the client-advisor relationship. 

  • Alignment of interests: Fee-only models align the advisor's success with the client's financial goals, creating a shared interest in achieving optimal outcomes. 

  • Comprehensive financial planning: Fee-only advisors often provide holistic financial planning services, addressing different aspects of a client's financial situation. 


  • Potential high costs: Fees based on AUM can be relatively high, especially for clients with substantial investment portfolios. 

  • Upfront costs for advice: Clients may incur upfront costs for comprehensive financial planning, which could be a barrier for individuals with limited budgets. 

  • Limited accessibility: Fee-only advisors may have minimum asset requirements, making their services less accessible to individuals with smaller investment portfolios. 

  • No incentive for small transactions: Since fees are not transaction-based, fee-only advisors may be less inclined to assist with smaller transactions or specific investment needs. 

Are fee-only financial advisors worth it? 

Fee-only financial advisors are worth it when clients prioritize unbiased advice, transparency, and long-term financial planning.  

A fee-only advisor is a valuable choice if a client seeks comprehensive, personalized guidance without the potential conflict of interest associated with commissions.

For example, a client with a substantial investment portfolio aiming for holistic financial planning and unbiased recommendations could find a fee-only advisor worthwhile. The alignment of the advisor's success with the client's financial goals and the transparent fee structure contributes to the overall value of the service. 

How to find a fee-only financial advisor?  

Finding a fee-only financial advisor requires thorough research and due diligence. Keep the following pointers in mind:

  • Search reputable websites like NAPFA (National Association of Personal Finance Advisors). 

  • Use a platform like Unbiased, where you can connect with a financial advisor and have a free first consultation.  

  • Ensure the financial advisor is a fiduciary, meaning they prioritize their client's best interests. 

  • Consider their experience, credentials, and services offered. 

  • Schedule an initial consultation to assess the advisor's approach and compatibility with your financial goals. 

  • Check for potential conflicts of interest and carefully review the fee structure. 

  • Consider recommendations from trusted sources. 

Seek expert financial advice 

Fee-only financial advisors offer greater transparency and fewer conflicts of interest to clients with substantial financial portfolios. They are typically client-centered fiduciaries who charge a percentage fee for the client's assets under their management. 

If you're looking for expert financial advice, be sure to seek out an SEC-registered financial advisor. Unbiased can match you with the best financial advisor for your needs. 


Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.