The journal
What fee-only means, what it doesn't, and how to check
Fee-only, fee-based and commission: three ways a planner is paid, the pull each one has, and the questions that tell them apart.
AI-generated illustration. Not a real home or business.
Three ways to be paid for advice
Every planner is paid by somebody. The question that matters is who, how much and for what, because the way a planner is paid shapes what is easy for them to recommend and what is awkward.
Commission. The planner is paid by the company whose product is sold: an insurer, a fund company, a firm that sells investments. The client may never write a check to the planner at all, because the payment travels inside the product. The advice and the sale arrive together, and the planner is paid only if something is bought.
Fee-based. A mix: fees paid by the client, and commissions on some products as well. The name sounds close to fee-only, and the arrangement is not the same. A fee-based planner can be paid twice for one piece of advice: once by you for giving it, and once by a company when you act on it.
Fee-only. The planner is paid by the client and by nobody else. Within that, practices charge in different ways: a flat fee for a plan, an hourly rate, a yearly retainer, or a share of the savings they invest for you.
What fee-only covers, said whole
Fee-only means the practice is paid only by the people it works for: no commissions, no ongoing payments from fund companies or insurers, and no referral fees from any attorney, accountant or insurance professional it names. It does not mean conflict-free.
The last part of that definition is the one most often left out. Referral fees are easy to miss, because they pass between professionals and the client never sees them: an accountant or an agent who sends a planner new clients, or a planner who is paid for sending clients the other way. A planner who takes them is not fee-only, whatever the website says.
Every way of being paid pulls somewhere
Every way of being paid has a pull in it. A flat fee can reward doing less work; an hourly fee can reward taking longer; a year of planning can reward keeping you as a client. A real planner names these and tells you how it handles them: here, the scope of every plan is written down before it starts, every hours estimate is in writing, and the year of planning ends by itself.
A commission pulls toward a sale. A share of invested savings pulls toward keeping money invested, when paying off a loan or buying a home might suit the household better. None of this makes anybody dishonest. It means a good planner can name the pull in their own pay and tell you, in writing, what they do about it.
That is why the word fee-only, on its own, settles less than it seems to. It tells you who pays. It does not tell you that the advice has no pull in it, and the regulator's own record shows what happens to practices that said otherwise:
- SEC press release 2024-121 (opens the source in a new tab) Nine advisers settled charges that included claiming conflict-free advisory services they could not substantiate, membership of an organization that did not exist, unsubstantiated awards and testimonials not from clients.
Questions that tell the three apart
Who pays you, apart from me?
The only fee-only answer is nobody. Ask it plainly, and ask it about the firm as well as the person, because a planner can be paid nothing directly while the firm they work for is paid by somebody else.
What will I pay in the first year, in dollars?
Not a share of something, not "it depends": a figure, or a way of working one out that you can check for yourself. A practice that publishes its fees can answer on the spot.
Do you take a fee for sending me to anyone?
Attorneys, accountants, insurance agents and mortgage brokers sometimes pay for introductions. Ask whether anyone pays the planner for sending you to them, and whether the planner pays anyone for sending you here.
Is there anything you would earn more for recommending?
A plain question, and the answer should be just as plain. If the honest answer is yes, the next question is how that is handled, and where it is written down.
Will you put all of this in writing before I pay?
A real practice puts its fees and its conflicts on paper, in its agreement and in its brochure. If the answers to the questions above are in neither, ask why.
How this practice answers them
The practice's own answers are on its fee pages, in the same words as everywhere else on this site. On the third question, its answer is this:
If you ask, the practice gives you more than one name for an attorney, an accountant or an insurance professional, and takes nothing from any of them. You choose, and you may already have your own.
Ask for a first meeting
A first meeting costs nothing, gives no advice and asks nothing of you afterwards: about forty-five minutes, at the office or by video. The office replies in office hours.