Fee-Only Financial Advisors: How They Work

When looking for financial advisors, you may run into what is known as a fee-only financial advisor. As you might have guessed, such financial advisors only charge the fees for their services. On the other hand, fee-based or commission-based advisors charge a fee and a commission on top of that. 

There are pros and cons to both options, some of which may cause you to pick a financial advisor over the other. However, if you are not too sure of which financial advisor to work with, you are in the right place! For this article, we will mainly focus on fee-only financial advisors and what you should know about them before working with one:

How do financial advisors generally charge their services?

For many fee-only financial advisors, the primary way of getting compensated for their services falls under a few things. 

First, some can charge a flat or hourly fee for the services they provide. The services they provide, along with the charges they make, will depend on the agreement you make. Following that, some may also charge for their services based on a percentage of AUM (assets under management). For example, they may charge one percent of the investment account value.

With that, commission-based financial advisors may charge a commission based on a product sold or any financial transaction. They may also be compensated with all of the above that fee-only advisors charge plus a commission.

Keep note that the word “fee-only” can still be a little on the gray side of things. Some may say that it should only be a term used to refer to those advisors who charge a fixed, flat, or hourly percentage. Some argue that it shouldn’t include those charging based on AUM, but regardless, fee-only advisors do not charge a commission on top of a fee.

The main benefits of working with fee-only financial advisors

One of the problems with working with a fee-based or commission-based financial advisor is that they may receive an extra commission to sell a specific investment solution that their company provides. This makes them more biased compared to a fee-only financial advisor who has no ties such as this.

Fortunately, this isn’t too much of a problem if you were to work with fee-only financial advisors. When working with a fee-only financial advisor, the conflict of interests will be limited, allowing you to pick solutions that more so satisfy your goals than the advisor’s goals.

Another benefit of working with fee-only financial advisors is that they are legally required to act in your best interest. They are usually a fiduciary when charging you a fee or making an investment for you. In other words, you can rest easy knowing that your fee-only financial advisor is working hard to meet your goals, as this also translates to their success.


In summary, when looking for a financial advisor, your best bet may well lie with a fee-only financial advisor. In fact, more advisors are becoming fee-only, meaning there are more options for you to pick from. Plus, with all the benefits they have to offer, such as transparency, limited conflicts of interest, and no hidden charges, they can provide you with the reliable advisory services you need without any unnecessary headaches. 

That said, do take time to research the financial advisor you want to work with. Different fee-only financial advisors will charge different rates and offer various services, so picking the right one is vital to your financial success.

Calamita Wealth Management is a financial planner offering fee-only financial planning to those looking to stay on top of their finances and meet their financial goals. If you are looking for certified financial planners in Charlotte, contact us today!

Investment advisory services provided by Calamita Wealth Management Inc. Investing involves risks, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.


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