2023-5_What Is a Fee-Only Financial Advisor & Why Does it Matter

By Scott Hamilton

If you are careful with your money, then you probably do a fair amount of research. And if you’re researching a financial advisor to work with, you’ve probably come across various fee structures and terms, including fee-only. 

But what does “fee-only” really mean, and is that the best choice for you and your financial needs?

Let’s take an in-depth look at what fee-only advisors have to offer.

What Does Fee-Only Mean? 

Fee-only financial advisors are paid directly by their clients. They don’t receive any types of kickbacks or commissions for recommending certain securities or investments. 

  • The National Association of Personal Financial Advisors (NAPFA) believes fee-only financial advisors are the most transparent and unbiased advisors you can come by.
  • Fee-only advisors are typically either registered investment advisors or CERTIFIED FINANCIAL PLANNER™ professionals. 
  • Both fee-only advisors and CERTIFIED FINANCIAL PLANNER™professionals require a fiduciary duty which means they are obligated to put the client’s best interests first.

How Are Fee-Only Advisors Paid?

There are a few different ways fee-only advisors get paid. Some popular methods include:

  • Hourly. You pay a fixed amount based on the number of hours your advisor spends meeting with you. 
  • Flat fee. This is similar to the hourly method, but you pay one flat fee no matter how many hours you spend meeting with your advisor. 
  • Percentage of assets under management (AUM). You pay a percentage-based fee depending on the value of your investments. This fee is typically around 1%.

What Are the Benefits of a Fee-Only Advisor?

If you’re in the market for a financial advisor, here are three reasons why you should choose a fee-only advisor: 

1. No Conflicts of Interest

No matter how pure an advisor’s intentions are, it can be hard to provide unbiased recommendations when they know they’ll get a kickback or commission. But this isn’t the case for fee-only advisors. They have no incentive to push certain products because they don’t sell any products at all. They’re solely compensated by you.    

2. They’re Fiduciaries

Fee-only advisors are fiduciaries, which means they’re legally and ethically required to act in your best interest at all times. They’re loyal, quick to disclose any conflicts of interest, and only give advice based on your unique situation and goals.  

3. You Get Objective Advice 

It’s easy to act on emotion when you’re dealing with your own money. There’s talk of a stock market crash, so you want to change your investing strategy. A family member needs to borrow money, even though you know giving it to them would jeopardize your financial security. You want to live a comfortable life in retirement, but you’re not sure if you’re on track. 

In situations like these, it’s nice to have someone you can go to for objective advice.

Why Hamilton Financial Planning Is Fee-Only

At Hamilton Financial Planning, we offer both fee-only hourly financial planning and comprehensive wealth management, which means you know exactly how much you’re paying. Depending on your needs, your plan may focus on one element or address multiple goals you’d like to accomplish over time. Whatever you choose, your financial plan is designed to serve as your road map, helping you navigate whatever comes your way. (See a sample financial plan here.

Our firm’s foundation is built on an honest, trusting relationship that is both transparent and responsive. Schedule a complimentary get-acquainted meeting online or reach out to us at 512-261-0808 or scott@hamiltonfinancialplanning.com.

About Scott

Scott Hamilton is founder and chief financial officer at Hamilton Financial Planning, a wealth management firm that specializes in providing comprehensive financial planning for retirees. With over 20 years of experience in the financial industry, and having completed over 250 financial plans for retirees across all industries, but mostly the oil and gas industry, Scott is passionate about providing his clients with the tools and insight they need to achieve their financial goals. He has a Bachelor of Business Administration in finance from Texas State University and an MBA in international finance from Pepperdine University. Scott has also been happily married to his wife, Gayle, for over 25 years. To learn more about Scott, connect with him on LinkedIn.