A fee-only adviser is compensated exclusively by fees paid by clients, and receives no commissions, revenue sharing, or other third-party compensation tied to the products a client buys.
Not the amount, and not the structure. Fee-only means every dollar of compensation comes from the client. No commissions, no trail payments, no revenue sharing from a product provider.
Fee-based means the adviser charges fees and may also receive commissions. The two terms are one syllable apart and describe materially different compensation arrangements, which is a persistent source of confusion for clients.
Asking directly — do you receive any compensation from anyone other than me — resolves it faster than the label.
Fee-only removes product-driven conflicts. It does not remove all conflicts.
An adviser charging on assets has an interest in assets staying under management, which is a real conflict when a client asks about paying off a mortgage, buying a business, or making a large gift. It is a smaller conflict than a commission, and it is not zero.
Fee-only describes how someone is paid. It says nothing about competence, and presenting a compensation model as evidence of skill is exactly the kind of claim the Marketing Rule exists to constrain.
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