How does a financial advisor get paid?

1 min readLast updated January 31, 2024by Unbiased team

We unpack how a financial advisor gets paid, exploring fees, commissions, and salaries and taking a look at how to compare advisor costs.


  • Financial advisors offer a number of services that include financial planning and management services. 

  • Advisors are paid through client fees, commissions, or salaries, depending on their services. 

  • Advisors and firms can also have a fee-only or a fee-based structure. 

  • You should always understand how your potential financial advisors is paid before choosing one. 

  • Unbiased can connect you with a financial advisor perfectly suited to meet your needs; your first consultation is free.  

Why do people use financial advisors? 

A financial advisor uses their knowledge and experience to create bespoke financial plans to help clients achieve their financial goals.  

In 2023, 57% of Americans sought financial advice. Of those people, 35% turned to financial advisors or other professionals for assistance and guidance.  

Advisors offer a range of services, such as financial planning and management, with their aim being to help clients achieve their financial goals. As can be expected, their services don’t come for free. However, how a financial advisor gets paid may differ depending on numerous factors.  

How does a financial advisor get paid? 

When it comes to how financial advisors are paid, the fee structure depends on the advisor or on the firm they work for. Let’s take a closer look: 

Client fees 

Some financial advisors charge fees.  

For example, an advisor might charge a management fee for investment management services. This fee is usually a percentage of the assets they manage for you.  

Let’s say your advisor charges a 1.5% management fee. If they manage investments worth $1 million on your behalf, you will pay $15,000 on the year, which may be divided on a monthly or quarterly basis.  

Fee-based financial advisors charge additional performance fees if their expertise results in your investments exceeding certain return benchmarks. Some advisors lower the percentage they charge for larger account balances.  

Many advisors charge an hourly or flat fee for one-time consulting services, specific projects, or financial planning services. 


Commissions are another common way in which financial advisors get paid.  

Many financial advisors’ commission structure is based on their recommending and selling of annuities, mutual funds, or other financial products.  

For example, let’s say that your advisor receives a 3% commission fee if you invest $5,000 into a mutual fund they recommend. The commission works out to $150. They will receive their commission in addition to any fees they charge you for the consultation. 


Salaries are a common method of how financial advisors get paid.  

With this method, the advisor receives a salary from the firm that employs them. They do not charge fees or earn commissions.  

Many firms offer incentives and bonuses to advisors who meet various milestones. For example, an advisor might receive a bonus for getting a specific number of new clients to sign up in one year. 

Fee-only vs. fee-based: what does this mean? 

How financial advisors are paid at a firm is the deciding factor when it comes to whether the firm and its advisors are fee-only or fee-based.  

Let’s learn more about these two different types of fee structures. 

Fee-only structure  

With a fee-only structure, a financial advisor or firm does not charge commissions.  

The client fees they charge for services they provide are their only source of income. These fees may include hourly or flat financial planning fees as well as percentage-based management fees. 

Fee-based structure  

Fee-based financial advisors and firms earn income from a combination of fees and commissions. In addition to charging financial planning and management fees, they also earn commissions through insurance or securities sales. 

It’s important to remember that commissions might be an incentive for your advisor to recommend certain products or transactions rather than others. This could be a potential conflict of interest, as the advice you receive should be based on your needs rather than how much commission your advisor could earn.  

Some experts recommend using fee-only advisors for this reason. SEC-regulated advisors are an exception to this, as they are held to a fiduciary standard, meaning the advice they give and the recommendations they make must be in your best interests.  

Unbiased only works with SEC-regulated financial advisors, meaning they only act in your best interest.  

How do you compare financial advisor costs? 

When it comes to choosing a financial advisor from among several, you should also compare costs and how financial advisors are paid – and there are a few ways to do this. 

One way is to check their Form ADV filing, which you can do if they register as an investment advisor with the U.S. Securities and Exchange Commission. The form explains the advisor’s fees and how they make their money, and it includes other information such as disclosures and the services they offer. 

Another way is to review their fee schedule online, provided they detail their fees on their website.  

If you can’t find their fees online, ask them directly via the phone, email, or in person.  

How to find a financial advisor 

How financial advisors are paid can make a big difference to your experience with them.  

Depending on the advisor you choose, you could pay next to nothing for professional services, or you could end up paying significantly more in terms of fees. You also could be recommended products and transactions that might not be in your best interest.  

Let Unbiased take the hassle out of finding a financial advisor.  

We can match you with an SEC-regulated financial advisor who can help you learn more about finances and give you expert financial advice when you need it.  

Get matched today. 


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.