What is a Fee-Only Financial Advisor

What is a Fee-Only Financial Advisor?

A Fee Only financial advisor is someone who does not sell any products, work on commissions, or accept any form of additional compensation which would create a conflict of interest. A Fee Only financial advisor charges a fee based on the value of the portfolio the advisor manages for you. The advisor is only paid by the you (the client) and has a fiduciary duty to always act in your best interest. Fee-Only financial advisors will also adhere to a fiduciary oath or pledge.

Fee-Only versus Fee-Based Financial Advisor

Fee-Based financial advisors are not the same as Fee-Only financial advisors. Fee-Based advisors may still collect commissions and other forms of compensation in addition to what you pay them. For example, a Fee-Based advisor may collect a fee from you for advice, but will also get an incentive bonus from their employer for having you open a home equity line of credit (HELOC) with their bank even if you don’t need a HELOC and/or a competing bank may offer better terms. A Fee-Only advisor will work with you to determine if you actually need a HELOC and evaluate several banks to find the best HELOC deal for you. While the two terms are used interchangeably, the term Fee-Based was created by large investment banks and insurance companies to confuse the public into thinking they are getting unbiased advice.

Is a CFP a Fee-Only Advisor or a Fiduciary?

Many Fee-Only financial advisors are also Certified Financial Planners (CFPs), but not all CFPs are Fee-Only. Therefore, make sure to do your due diligence before selecting a financial advisor and insist your financial advisor is Fee-Only and commits to a fiduciary oath or pledge.

How to research a financial advisor

All financial advisors must submit annual disclosure forms called ADV with the Securities and Exchange Commission (SEC). You can search for an advisor or firm’s ADV by visiting the SEC website. This website will also search the FINRA’s BrokerCheck system to see if the entity is a brokerage firm. Because the size of a firm determines whether the entity registers with their home state or the SEC, the SEC website still contains information about all types of advisors.

ACap Asset Management is a Fee-Only financial advisor who acts in a fiduciary capacity.

Contact ACap Advisors & Accountants to schedule a free initial consultation. Our clients include individuals, small businesses, entrepreneurs, and anyone serious about saving and investing for their future.