What Is a Fee-Only Financial Advisor & Why Does it Matter?
By Net Worth Advisory Group
If you’ve been exploring financial advisors, chances are you’ve stumbled upon the term “fee-only.” It’s often linked with registered investment advisors and can be music to your ears when seeking financial guidance.
Why is that, and what exactly does it mean?
In this article, we explore what being a fee-only financial advisor entails—and why we at Net Worth Advisory Group hold this term in high regard.
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. This is because both types of professionals require a fiduciary duty, which means they are obligated to put their clients’ 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 Net Worth Advisory Group Is Fee-Only
At Net Worth Advisory Group, our focus is solely on our clients—always. Transparency and fairness are at the core of everything we do. We’re committed to providing clients with our full loyalty and dedicated support as they work to pursue their financial goals.
Whether you have a specific financial question or would like assistance in crafting a comprehensive financial plan, as fee-only advisors, we’re here to offer guidance every step of the journey.
Ready to take control of your financial future? Call us at 801-566-6639 or schedule a complimentary, no-obligation consultation to see if we are a good fit to help you pursue your objectives. To learn more, visit our website.
About Net Worth Advisory Group
Founded in 2003, Net Worth Advisory Group is an independent, fee-only, CERTIFIED FINANCIAL PLANNER™ and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.
As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. According to the CFP Board, there are 97,000+ CFP® professionals in 2023, representing about 1 in 3 financial advisors in the U.S. Net Worth advisors are also members of NAPFA, which only has about 4,600 advisors, and are either CFP® professionals or CFP® professionals in training.
Net Worth Advisory Group’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.
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