What is a fee based financial advisor?

Fee-only and fee-based are the two main financial advisor fee structures. Fee-only advisors only earn money through the fees their clients pay. The fee is often a percentage of assets under management (AUM). Sometimes, however, an advisor may charge a flat fee or an hourly rate.

How do fee-based advisors make money?

Just as with fee-only advisors, these fees are often based on a percentage of AUM. However, the advisor also may charge clients flat fees, hourly fees or performance-based fees. Unlike fee-only advisors, fee-based advisors may also earn money through other means. Here are three main ways that fee-based advisors could make money:

Are advisors fee-based or fee-only?

In short, if your advisor earns money through anything besides a fee for the management of your portfolio, your advisor is fee-based rather than fee-only. Advisors won’t necessarily advertise their fee structures. Thus, it’s important to always ask any advisor you work with how they earn compensation.