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What Is a Fee-Only Financial Advisor & Why Does it Matter?

What Is a Fee-Only Financial Advisor & Why Does it Matter?

July 31, 2022

You don’t want to navigate your financial journey alone, so you’re on the hunt for a financial advisor to partner with—an important step to help pursue your financial goals! While researching to find the right advisor, you may have come across the term “fee-only.” This term is usually used to describe investment adviser representatives who provide services and planning that, by law, can only be in your best interest.

But what does this term mean, and why is it important?

In this article, we will discuss what “fee-only” means, outline other types of fee structures some financial professionals use.

How Advisors Get Paid

To truly understand the value of a fee-only advisor, it’s first important to understand the different ways advisors can get paid. The three most common methods include:

  • Commission-based
  • Fee-based
  • Fee-only

Commission-based financial professionals don’t charge fees to their clients. On the surface, this model sounds great. But these advisors have to get paid somehow, so instead they earn commissions from financial and insurance products they sell to their customers. Even if they mean well, commission-based financial professionals may be more motivated to sell products that will earn them the most money, rather than providing advice that is in the best interest of the client.

Fee-based advisors may sound like they’re fee-only, but they also make commissions from financial products and transactions. In addition to charging their clients fees, they earn a percentage of their revenue from selling products on behalf of brokerage firms, mutual fund companies, or insurance companies, thus placing them at the same risk for conflicts of interest as commission-based advisors.

Fee-only financial advisors are paid directly by their clients—and only by their clients. They don’t receive any type of kickbacks or commissions for recommending certain securities or investments. Their fees are typically structured as a small percentage of the assets they manage, known as assets under management (AUM) fees. Because fee-only advisors only get paid by their clients, their incentives are usually better aligned with the clients they work for than commission-based or fee-based advisors.

The Benefits of Working With a Fee-Only Financial Advisor 

The National Association of Personal Financial Advisors (NAPFA) believes fee-only advisors are the most transparent and objective advisors you can come by. (1) They typically have one of two designations: either registered investment advisor or CERTIFIED FINANCIAL PLANNER™. If you’re in the market for a financial advisor, here are three reasons why you should choose a fee-only advisor: 

1. Reduced Conflicts of Interest

No matter how pure an advisor’s intentions are, it can be difficult to provide objective recommendations when they know they’ll get a kickback or commission. But this isn’t the case for fee-only advisors. They have no incentive to push certain products because they don’t sell any products at all. They’re solely compensated by you.    

2. Fiduciary Commitment

Fee-only advisors are fiduciaries, which means they are legally and ethically obligated to act in your best interest at all times and to disclose any potential conflicts of interest. They are loyal to you and provide objective financial advice based on your unique situation and goals.  

3. Objective Advice 

It’s easy to act on emotion when you’re dealing with your own money. There’s talk of a stock market crash, so you want to change your investing strategy. A family member needs to borrow money, even though you know giving it to them would jeopardize your financial security. You want to live a comfortable life in retirement, but you’re not sure if you’re on track. In situations like these, it’s nice to have someone you can go to for objective advice.

Why GLH&C Financial Services Is Fee-Only

At GLH&C Financial Services, we pride ourselves on transparency and objectiveness. Our mission is to provide our clients trusted advice, exceptional personal service, and undivided loyalty as we help them pursue their financial objectives. We always put our clients’ interests ahead of our own, every time.

Whether you have a specific financial concern or need help developing a solid financial plan, we’re here to guide you every step of the way. Email me at or give me a call at 916-276-8677 to see if I am the right fit to help you pursue your ideal financial future.

About Jim

James Callens is a financial advisor at GLH&C Financial Services, a full-service, comprehensive wealth management firm. Jim has over 30 years of experience in the financial industry and uses his extensive resources and knowledge to help his clients experience simplicity and clarity in their financial lives. Jim spent more than 20 years working for GE Financial Advisors, both in its insurance services department and as a regional manager and financial advisor. He took part in GE’s Six Sigma Quality Training program and completed the National Association of Life Underwriter’s four-year LUTCF course. Jim also earned his certificate in financial planning from the University of California at Davis. In 2011, Jim combined his own firm, Callens Financial Group, with GLH Financial Services, creating GLH&C Financial Services, so he could provide even more value to his clients. 

He has served as a board member for several nonprofit organizations and has been involved in Cub Scouts leadership and youth sports coaching. Jim lives in Folsom, California, with his wife, Melissa, and his four children, Jacob, Kristen, Grant, and Andrew. Together, they enjoy outdoor activities like kayaking, bicycling, and vacationing at Lake Tahoe. To learn more about Jim, connect with him on LinkedIn.