Fee-Only vs. Fee-Based Financial Planner: Key Differences
Fee-only financial planners get paid by you directly; fee-based planners may also earn commissions on products they sell. Ask any advisor how they make money.“Fee-only” sounds strikingly similar to “fee-based,” but there's a big difference in the world of financial planning.
Fee-only vs. fee-based financial advisors
| Fee-Only Financial Planner | Fee-Based Financial Planner |
|---|---|
|
|
A fee-only financial planner is paid directly by clients — and only by clients — for their services. The type of payment may vary — it could be a flat fee, an hourly rate or a percentage of assets under management.
What won't vary: Fee-only planners do not receive commissions or other payments from the providers of financial products they recommend to clients. Commissions are common in the financial services industry, but you can see how they might present a conflict of interest: If a planner can earn a 1% commission for recommending mutual fund A, and a 2% commission for recommending mutual fund B, the temptation to swing your portfolio toward mutual fund B could be strong. A fee-only planner has set up their payment structure to eliminate that temptation.
AD Advertisement
Get matched to a financial advisor for free with NerdWallet Advisors Match. Match With an Advisor for free
AD Advertisement
Get matched to a financial advisor for free with NerdWallet Advisors Match. Get Matched for Free
AD Advertisement A fee-based planner, on the other hand, will also generally charge clients a flat, hourly or AUM fee. In addition to that, fee-based planners can earn commissions like the ones described above, or revenue from recommending other products or services to clients.
» Read more: Learn how to choose a financial advisor
🤓 Nerdy Tip
Read your advisory firm’s Form ADV filing with the U.S. Securities & Exchange Commission. The document includes information that spells out how advisors at the company are compensated. The average cost of a fee-only financial advisor
As mentioned above, three of the most common fees that fee-only financial planners charge are AUM fees, flat fees and hourly fees. You usually don’t pay all three fees (the AUM fee is the most common method), but they are among the fee structures you may encounter when you hire a financial advisor.
The below table shows an overview of these fees, what they are for and the typical cost associated with them.
| Fee type | Commonly associated with | Typical cost |
|---|---|---|
| Assets under management (AUM) | Managing your portfolio of stocks, bonds and other investments. | 0.25% to 0.50% annually for a robo-advisor; about 1% for a financial advisor. |
| Flat annual fee (retainer) | Special projects, such as analyzing whether to buy or sell your business. May also provide more access to the advisor. In some cases, advisors may substitute flat fees for AUM fees. | Typically $2,500 to $9,200. |
| Hourly fee | Special projects, such as helping create a financial plan for a specific situation, such as a divorce. | $200 to $400. |
| Per-plan fee | Creating a detailed, written comprehensive financial plan for a client. | Typically $3,000, but varies by service. |
| To compile this information, we reviewed industry studies on average rates among financial advisors. Those studies included:
We also reviewed fees charged by providers reviewed by the NerdWallet investing team. | ||
Be sure to compare financial advisor costs and services before choosing an advisor, and ask these 10 questions before you hire anyone.
Is a fee-only financial advisor better?
Understanding whether your advisor is getting payments for steering you toward certain mutual funds or other financial products is important — and raises questions about conflicts of interest. A “suitable” investment for you may not necessarily be the best investment for you or the most cost-effective option.
Choosing a fee-only financial planner who follows the fiduciary standard is usually a better choice for most investors. Several professional groups require members to abide by the fiduciary standard, including The National Association of Personal Financial Advisors, Garrett Planning Network, XY Planning Network and the Alliance of Comprehensive Planners.
Article sources
NerdWallet writers are subject matter authorities who use primary,
trustworthy sources to inform their work, including peer-reviewed
studies, government websites, academic research and interviews with
industry experts. All content is fact-checked for accuracy, timeliness
and relevance. You can learn more about NerdWallet's high
standards for journalism by reading our
editorial guidelines.
- 1. National Association of Personal Financial Advisors. What is Fee-Only Financial Planning?. Accessed Apr 16, 2026.
