A “fee-only” financial advisor receives compensation only from you, like a CPA or attorney, versus being paid through commissions from products they sell. Fee-only financial advisors do not sell products or receive compensation from a brokerage firm, a mutual fund company, an insurance company, or any source other than you. This means they represent only you and your interests when giving you advice and have no conflict of interest. In fact, they have a responsibility to make recommendations in your best interest. A fee-only advisor may have a rate that is based on a percentage of the assets they manage for you, and thus debited out of your account each quarter, or it could be a flat annual fee, or an hourly rate.
“Fee-based” and “fee-only” are not the same. “Fee-based” advisors may charge both fees and commissions based on the products they sell. “Fee-based” advisors may not have a duty to disclose how they are compensated.