Fee-Only Advisors

Advisor compensation is one of the most misunderstood, potentially complicated, and all too-often slimy aspects of our industry. Which is why when someone is evaluating a financial advisor, financial planner, wealth manager, etc., it's important to consider how they get paid. Fee-only financial planners are paid directly by their clients and do not receive commissions or compensation from product sales. This compensation structure is designed to reduce conflicts of interest and increase transparency in the client-advisor relationship.

A fee-only financial planning firm can legally only be paid by client fees, and the advisors cannot earn commissions from recommending specific financial products or services. This is different from fee-based or commission-based advisors, who may receive compensation or commission from third parties such as mutual fund companies or insurance providers. If one product pays them more, but isn't necessarily better for you, there is a possibility that the compensation structure could influence recommendations, even if unintentionally. Imagine a doctor-patient relationship where the doctor gets paid more or less depending on which drug they prescribed you. You might wonder if they are recommending what's best for you, or what's best for them. This dilemma is avoided when you work with a fee-only advisor.

Why We're Fee-Only

At DecisionPoint Financial, we're fee-only for a reason - we believe it is objectively what is best for our clients. ANY time a commission is introduced, so is a conflict of interest. This puts the client at risk, and that goes against everything we believe in as a firm. We see firsthand the frustration that commission-based advisors cause when clients come to us after working with a product-based advisor or insurance salesperson. It is far too common for someone to show up with an annuity or permanent life insurance policy they didn’t fully understand when they signed on. They're often frustrated to learn that their money is tied up, the growth hasn’t kept pace with the broader market, and accessing their funds now could mean paying a surrender charge. These products can carry high internal costs and limited liquidity, and they are too-often sold to people who don’t need them, all while generating large commission checks for the person selling them. As fee-only advisors, we’re not compensated for selling products, which allows us to give advice that’s objective, transparent, and focused on what is actually in your best interest.

What to Ask When Choosing an Advisor

Before hiring an advisor, we encourage you to ask the following questions:

How are you compensated? Can you show me a clear fee schedule?
Are you a fiduciary at all times when providing financial advice? The alternative is a less stringent standard, known as the "suitability standard," that requires their recommendations to be "suitable", but not necessarily in your best interest.
Are you associated with a broker-dealer? If so, that’s a red flag. Registered representatives of broker-dealers are representing the company, and often trying to sell you something. Their legal duty is first to the firm they are licensed with. When they sit across from you, they’re representing the seller in the transaction, not the buyer (you). That is a built-in conflict of interest, and it's often not disclosed as clearly as it should be.
Do you or your firm receive compensation from any third parties? Any time someone else is paying your advisor, it's most likely because your advisor is serving their interest. In our minds, that's a red flag.
What percentage of your revenue is derived from commissions vs. from me the client? To us, any percentage that comes from commissions is a red flag.
Are you compensated via ongoing fees, or up-front based on a sales commission? When someone is compensated with, for example, 5 years worth of fees up-front (via a sales commission), it does not create an incentive for them to continue serving you or providing ongoing financial planning. Under the asset-based pricing arrangement, we are incentivized to demonstrate value and earn our keep year after year.

Why Compensation Structures Matter More Than You Think

Understanding how an advisor gets paid isn’t just a technical detail. It’s one of the most important ways to protect yourself as a consumer. If you’re working with someone who receives commissions for selling products, there may be pressure to recommend something that benefits them financially. In contrast, fee-only advisors are compensated only by their clients. And under an asset-based pricing model, the more money your portfolio earns, the more your advisor gets paid, which we believe creates a healthy and mutually-beneficial alignment between you as a client and us as your advisor. It also removes a major source of potential bias and allows our advice to stay centered on what matters most: your goals, your financial plan, and what’s best for you over the long-run.

Have Questions?

We’re always happy to chat. Call us directly at 480-553-6249, or reach out through our website to learn how we can help you plan with purpose.

–– Your DecisionPoint Financial Planning Team ––