Advice-only financial advisors provide financial planning services but don’t manage investments. They can help you create and implement a financial plan, navigate big life decisions and feel confident you’re making the right moves with your money. But they won’t take over control of your investment accounts or charge you a fee based on the amount of money you have invested.
What’s different about an advice-only financial planner
One of the main differences between an advice-only financial planner and a traditional financial advisor is that typically you pay an hourly, annual or one-time fee to work with an advice-only financial planner, depending on whether you’re hiring them for a limited time or for ongoing financial planning and advice. That differs from the most common financial advisor fee model, in which the fee is a percentage of the investments they’re managing for you.
In some cases, the shift in how the advisor is paid signals a shift in their focus. That was the compelling reason behind starting The Wealthy Parent, says Kelly Palmer, a Chicago-based certified financial planner and chartered financial analyst who provides advice-only financial planning.
Palmer started her wealth management career at a firm that offered active investment management. She found that conversations with clients centered on investment performance. Now, as an advice-only planner, she focuses on the reasons behind the investment strategy. “I like talking about life,” she says. “What are we actually doing with these funds?”
She still provides investment advice and tax planning — two critical components of financial planning. She’s even willing to sit on a video call and tell a client which buttons to push on their brokerage’s website. But she’s not trying to prove her value by beating the market or taking control of a person’s portfolio.
Often, Palmer finds people want to meet with a financial advisor to get a trustworthy second opinion on their finances. And she thinks advice-only planners provide “a whole other level of fiduciary advice” by not basing their fees on a client’s investable assets. “We’re able to make recommendations that don’t change our fee,” she says.
When to work with an advice-only financial advisor — and when not to
Advice-only financial planners can be a good option if you’re looking for help from a financial advisor but:
- You don’t meet minimum balance requirements. Financial planners charging a percentage of assets under management (AUM) may require clients to have hundreds of thousands of dollars or more to invest (otherwise the advisor may not feel the fees justify the time). But if you’re new to investing — or if the bulk of your assets are inside a workplace retirement plan, such as a 401(k) that the advisor can’t directly manage — you may fall short of those minimums.
- You think AUM fees are too expensive. Advisors collect their fees year in and year out, regardless of how much advice they’re actually dispensing. AUM fees add up over time and can impact returns, so if you don’t value that ongoing relationship and behind-the-scenes help, it could feel like you’re paying for a service you don’t use enough. Plus, not everyone wants or needs an advisor. For investors who want more control over their portfolio or who have simple needs, investment management can be had for much less from robo-advisors.
Advice-only financial planners are not for everyone, though. They aren’t a good fit for someone who wants to outsource everything, Palmer says. And because investment control stays with the client, an advice-only planner isn’t there to stop you from making impulsive changes during times of market volatility.
To tell if you need someone standing between you and the “sell” button, think about how you felt during recent big market swings, Palmer says. “Usually that’s kind of a good hint.”
» Which type is right for you? Learn how to choose a financial advisor
How to find advice-only financial advisors
If you’re looking for financial advice that’s not based on the size of your portfolio, here are a few places to check and what you can expect to pay.
- NerdWallet's find an advisor tool. Enter your ZIP code and filter for other features that matter to you, including how the advisor is paid.
- XY Planning Network. This is a network of financial planners who typically focus on Gen Xers and millennials who don’t have a lot of assets to invest. There’s no age limit, though, and some of the planners specialize in helping baby boomers as well. Advisors must uphold a fiduciary standard, which means they put their clients' interests first and must eliminate or disclose their own conflicts of interest. They also must offer flat monthly fees (although they may offer other options, including hourly or assets-under-management fees).
- Garrett Planning Network. Planner Sheryl Garrett’s network represents planners willing to charge by the hour, although many also manage assets for a percentage fee. Members are either certified financial planners or on track to get the designation, or they’re certified public accountants who have the personal financial specialist credential, which is similar to the CFP. Garrett also requires its planners to be fiduciaries.
- Advice-Only Financial. Financial blogger Harry Sit started his service to connect people with advice-only advisors who don’t accept asset management fees. Sit’s concern is that advisors who do both will be tempted to push people toward asset management, since it’s often more lucrative. Sit charges $200 for a year of access to his directory of fiduciary advisors who are either local or, if none are available, willing to work remotely.
- Association for Financial Counseling & Planning Education. Not every tax return requires a CPA and not every financial situation requires a CFP. An accredited financial counselor or financial fitness coach can be a more affordable alternative. Coaches and counselors in private practice typically charge an hourly rate. Others are employed by the military, credit unions or other organizations and offer their services for free or at reduced charge. These counselors or coaches focus on issues relevant to middle- and lower-income Americans, including budgeting, debt management and retirement planning.
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