How would you evaluate a financial advisor? Most individuals naturally focus on performance, credentials, location, personality fit, etc. All of those matter, but in our experience, one of the most important factors is often overlooked: how your advisor is compensated.
Compensation doesn’t just determine how an advisor gets paid - it shapes incentives, influences recommendations, and ultimately impacts the kind of advice an advisor might provide.
Two of the most common models in the industry are commission-based advisors and fee-only fiduciary advisors. Understanding the difference can help investors make more informed, confident decisions regarding who to work with.
Commission-based advisors are compensated through the sale of financial products, such as mutual funds, annuities, or insurance policies.
When a transaction occurs, the advisor receives compensation from the product provider. As a result, compensation can vary depending on the type of product recommended. It can also be less transparent, as clients may not always see the full cost embedded within a product.
These advisors often operate under a suitability standard or Regulation Best Interest (Reg BI), which requires recommendations to be appropriate for the client, but not necessarily the lowest-cost or most optimal option available; in other words, the recommendation must simply make sense for the client.
There are situations where a commission-based model makes a lot of sense. If someone has a specific one-time need such as a life insurance policy, an annuity, a particular investment product, etc., a commission-based advisor can facilitate that transaction. There are certainly other situations, but those are some of the most common. Keep in mind, we partner with commission-based advisors all the time to provide some of those one-time products mentioned earlier, when it is appropriate for the client.
It’s important to note that many commission-based advisors provide valuable guidance and long-standing client relationships. However, the structure itself can introduce inherent conflicts of interest, since compensation is tied to product selection, not advice given.
As a firm built around a fee-only fiduciary approach, we are compensated exclusively by our clients - not by financial products, commissions, or third-party incentives.
Our fees are transparent and straightforward, and most importantly, they are not tied to the sale of any investment or insurance product. We have made the decision to clearly state the fees our clients pay to us in their quarterly portfolio reviews, so there are no questions on the topic.
We also operate under a fiduciary standard, meaning we are legally and ethically obligated to always act in our clients’ best interests. This is one of several standards that exist within the industry; the standard that applies can vary depending on how an advisor is licensed and compensated.
What this allows us to do is focus on what matters most using our RITE framework:
We believe great financial planning isn’t just about investments, it’s about getting Risk, Investments, Tax, and Estate decisions working together. Because we are not compensated based on product recommendations, our advice is centered on what we believe will be a desired outcome for each client’s unique situation, nothing more, nothing less. This structure helps us provide objective, client-centered advice while respecting that every decision ultimately belongs to the client, without any pressure from us because of how we are compensated.
If you’re thinking through how these compensation structures apply to your own situation, it can be helpful to talk through how they show up in real planning decisions.
We often hear confusion around the term “fee-based.” Fee-only vs fee-based advisors are two separate things. Fee-based financial advisors operate under a hybrid model - charging fees while also receiving commissions from certain products. While this can work in some client situations, it’s important to understand that it is not the same as fee-only, and conflicts may still exist depending on how compensation is earned.
We often hear confusion around the term “fee-based.” Fee-only vs fee-based advisors are two separate things. Fee-based financial advisors operate under a hybrid model - charging fees while also receiving commissions from certain products. While this can work in some client situations, it’s important to understand that it is not the same as fee-only, and conflicts may still exist depending on how compensation is earned.
At its core, this conversation is about alignment and achieving goals. No compensation model is perfect, which is why transparency and clear communication are paramount regardless of structure. In our opinion, the relationships where the advisor succeeds when the client succeeds, are very strong.
We believe clients deserve advice that is:
A fee-only fiduciary structure is designed to support exactly that.
Regardless of whom you choose to work with, we encourage every investor to ask a few simple questions:
The answers to these questions can provide clarity, build trust, and help ensure you’re working with someone whose incentives are aligned with your financial goals.
Choosing a financial advisor is ultimately about finding the right fit, which means different things to different people. In our view, that starts with transparency, alignment, and a commitment to always putting clients first. However, like most aspects of finance, the specific situation and circumstances will determine what may be ideal for a family.
For those looking to take the next step, you can learn more about how we approach planning.
[ Learn more about our approach ]
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