Fee-based or fee-only financial planner – what’s the difference?
The decision you make regarding whom you get financial and/or investment-related advice from is important.
Read this article to learn the key difference between fee-only and fee-based advisors.
Seeking Financial Guidance
When you need critical health, legal, or tax advice, you probably seek the services of an expert whom you assume will provide advice that is intended to give you the very best outcomes specific to your personal situation.
You do this because the advice you get could not only change the course of your entire life but could also affect your entire family for generations.
The term used to describe the professional providing this level of advice is fiduciary.
A fiduciary is required to always put you first and to avoid (or minimize when unavoidable) conflicts of interest.
Two Types of Engagements
The decision you make regarding whom you get financial and/or investment-related advice from can be just as important. Financial and investment-related advice often overlaps with health, legal, and tax advice, so shouldn’t you expect the same level of professional conduct?
“Fee-only Advisor”
If you’ve ever asked around for a referral to a financial planner or investment fiduciary, you may have heard the term “fee-only”.
What this means is that the financial planner works for you (the client) and only gets compensated by you for advice, plan implementation, and/or ongoing asset management.
In doing so, the fee-only financial planner is always acting as a fiduciary (for you).
“Fee-based Advisor”
Another term that you might run across is “fee-based,” and although this is similar to fee-only, it is significantly different.
How so? Being fee-based allows the financial planner to get paid by the client and other sources, such as commissions from financial products that they sell to you.
When getting paid for selling you things, they are working for the financial firm (not you), which is a significant conflict of interest!
Paying for Advice, Not Products
For really important decisions, would you prefer to work with someone who is interested in selling you financial products or someone who is interested in the outcome of their advice on your financial well-being?
You can choose to work with a fiduciary, whether it’s all the time or just sometimes. For life and family-impacting decisions…why risk it?
S.E.E.D. Planning Group LLC (S.E.E.D.) is a Registered Investment Advisor (RIA) with the Securities Exchange Commission. S.E.E.D.’s team provides investment fiduciary and financial planning services to clients. Our fees are disclosed, easy to understand, and not predicated on product sales.
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