Commission vs. Fee-Based vs. Fee-Only

When it comes to picking an advisor to work with understanding how they are compensated is important. Below you understand the primary differences between the three types of compensation an advisor could receive.

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Fee-Only Advisor:

Only compensated by YOU the client. Charges either an asset under management (AUM) fee, flat rate fee for planning, or hourly fee for planning. Advice provided is ALWAYS from a fiduciary perspective, meaning the guidance cannot be influenced by the advisors compensation. Provides ongoing advice on investments.

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Fee-Based Advisor:

Can be compensated by either commissions on trades and/or by fees charged to you in the form of assets under management (AUM), or a flat rate/flat fee for advice. Fee based advisors can serve as a fiduciary for their clients. Can provide ongoing advice on investments.

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Registered Representative (Commission Agent):

Compensated by commissions for selling financial products such as mutual funds and variable annuities. Provides initial advice on investment selections.