Your financial adviser can help you plan for the future, save for retirement, and ensure upcoming generations are set up for success. But advising services shouldn’t come with confusing fees or misleading advice. Learn about the benefits of fee-only wealth management in this post from Moneta.
What Is a Fee-Only Financial Planner?
A fee-only financial planner is a type of wealth advisor who earns money by collecting a transparent fee from their clients. Like other financial planners, a fee-only advisor may do the following:
- Manage your investment portfolio
- Help you build up your retirement savings
- Assist in creating a plan for you to pay down debt or save for a big purchase like a home
- Recommend investment strategies based on your financial goals
But, unlike other advisors, a fee-only financial planner doesn’t work on commission. That means the only way they earn money is through the fees they earn from clients in exchange for services.
1. Fee-Only Advisors Are Fiduciaries
All fee-only financial advisors who are registered with the U.S. Securities and Exchange Commission (SEC) are bound by a fiduciary duty to their clients. This means they must act in the best interest of their clients and put their clients’ interests above their own. Any registered investment advisor (RIA), whether it’s an individual or a firm, must be registered with the SEC and has a fiduciary obligation to their clients.
Many fee-only advisors are also certified financial planners (CFPs). The Certified Financial Planner Board of Standards, Inc., which administers this certification, holds planners to a fiduciary obligation as part of their rigorous code of conduct.
2. Fee-Only Advisors Have a Transparent Fee Structure
Fee-only financial planners are upfront about the fees they charge their clients. Often, a fee-only advisor will charge a fee based on the assets under management (AUM). This is the amount of money they manage for you through your investment accounts. Your fee may be a percentage of this total, such as 1% of your assets. The more money you have invested, the higher your fee.
Other fee-only advisors might charge a flat fee. They may charge an hourly rate for services or charge a flat retainer fee each month. No matter the payment structure, a fee-only financial planner should disclose their fees before you enter into an advising relationship with them. In contrast, advisers who work on commission or are “fee-based” are often not required to disclose how they’re compensated.
3. Fee-Only Advisors Provide Service without a Sales Pitch
Some financial advisors earn a commission when they sell certain investment products or services. They may partner with one or more companies that sell investing tools. This can put you in a tough position — your advisor may pressure you to use an investment product that may not be a good fit for you or your financial goals.
However, fee-only advisors don’t work on commission, so they aren’t incentivized by product sales. Because their focus is on the personalized advice they provide, not a successful sales pitch, clients can trust that they have fewer conflicts of interest.
4. Fee-Only Advisors Offer Comprehensive Advice
When you choose a fee-only advisor, you’re working with someone who can provide an objective view of your finances. Rather than trying to earn a commission, your advisor is focused on tailoring their investment strategy to your specific goals and needs. And without the emphasis on product sales, your wealth manager can spend more time focusing on providing solid advice.
Choose a Fee-Only Registered Investment Advisor
If you’re looking for an experienced financial advising firm with a fee-only compensation structure, choose Moneta. As fiduciaries, we are committed to providing best-in-class service while always acting in our clients’ best interests. Moneta services include:
- Family office services
- Trust services
- Tax planning
- Estate planning
To learn more about our fee-only wealth management services, contact us.
