Fee-based or fee-only financial advisers?

Fee-only guarantee
Fee-only guarantee © sergign/

If you want a fee-only adviser, there are a few things you should do, Scott says.

Many financial firms disclose any broker-dealer relationships on their website, says Scott. To avoid fee-based operations, look for language indicating that securities are offered through a "broker-dealer."

You can also visit the website of the Securities and Exchange Commission and access a company's Form ADV. This will reveal the firm's compensation structure.

An easier way to ensure you are getting a fee-only -- as opposed to fee-based -- adviser is to visit the website of the National Association of Personal Financial Advisors, or NAPFA. All firms that are members of NAPFA meet strict fee-only criteria.

If you want extra protection, Scott suggests asking your adviser to sign a fiduciary oath stating that the adviser pledges to do the following:

  • Act as a fiduciary 100 percent of the time. This means the adviser will put the client's interest first, ahead of the interests of the adviser or the adviser's firm.
  • Disclose all conflicts of interest.
  • Accept payment only from the client for services rendered.
  • Refuse to accept referral fees or commissions that are contingent upon the purchase or sale of a financial product.

"If a financial professional won't sign a fiduciary oath, (then) they do not act as a fee-only registered investment adviser at all times," Scott says.


Show Bankrate's community sharing policy
          Connect with us

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

CDs and Investment

Can heirs cash an old trust?

Dear Dr. Don, The youngest of 6 children, I am 48 years old. My father joined the Navy at 22. In Italy, he met his bride and my mother, and returned to the U.S. to raise our family. In 1959, he bought a trust certificate... Read more



Dr Don Taylor

Recognizing a loss to boost your yield

In taxable accounts, your capital losses can be used to offset your net long-term capital gains.  ... Read more

Partner Center

Connect with us