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What Is a Fee-Only Financial Advisor & Why Does It Matter_.jpg

Fee-Only. Fiduciary. Independent

If you’ve spent any time researching financial advisors, you’ve probably come across the term “fee-only.” It’s used to describe registered investment advisors, and it’s one of the best things you can hear when searching for a financial professional.

But what does it mean? And why is it important? Below we have outlined the different types of compensation for financial advisors and highlighted the benefits of using a fee-only financial wealth management company. 

Compensation Structure for Financial Advisors

To truly understand the value of a fee-only advisor, it is important to understand the different ways advisors can get paid. The three most common methods include:


  • Commission-based

  • Fee-based

  • Fee-only


Commission-based advisors don’t charge fees to their clients. On the surface, this model sounds great, but these advisors have to get paid somehow, so instead they earn commissions from the financial and insurance products they sell to their customers. Even if they mean well, commission-based advisors may be more motivated to sell products that will earn them the most money, rather than providing objective advice that is in the best interest of the client.


Fee-based advisors may sound like they’re fee-only, but they also make commissions from financial products and transactions. In addition to charging their clients fees, they earn a percentage of their revenue from selling products on behalf of brokerage firms, mutual fund companies, or insurance companies, thus placing them at the same risk for conflicts of interest as commission-based advisors.


Fee-only financial advisors are paid directly by their clients—and only by their clients. They don’t receive any type of kickback or commission for recommending certain securities or investments. Their fees are typically structured as a small percentage of the assets they manage, known as assets under management (AUM). Because fee-only advisors only get paid by their clients, they only succeed when you succeed.

The Benefits of Working With a Fee-Only Financial Advisor 

The National Association of Personal Financial Advisors (NAPFA) believes fee-only advisors are the most transparent and unbiased advisors. They typically have one of two titles: either registered investment advisor or CERTIFIED FINANCIAL PLANNER®. If you are in the market for a financial advisor, here are two reasons you should choose a fee-only advisor: 

1. Reduced Conflicts of Interest

No matter how pure an advisor’s intentions are, it can be difficult to provide unbiased advice if they have a financial incentive to recommend products that will be more remunerative for themselves. This is not the case for fee-only advisors. Since they have no financial incentive to push one product over another, they are free to provide objective advice and recommend the products that are most suitable for your specific financial circumstances.    

2. Fiduciary Commitment

Fee-only advisors are fiduciaries, which means they are legally and ethically obligated to act in your best interest at all times and to disclose any potential conflicts of interest. They are loyal to you and provide objective financial advice based on your unique situation and goals.  

Why Shearwater Capital Is Fee-Only

At Shearwater Capital, we have a legal and moral obligation to place our clients’ interests first at all times.  We pride ourselves on transparency and unbiased advice. We give our clients our undivided loyalty and are dedicated to helping them reach their financial objectives. 

Whether you have a specific financial concern or need help developing a solid financial plan, we’re here to guide you every step of the way. Schedule an introductory phone call online or contact us at (314) 434-4750 or to get started.

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