When you see an advisor advertising themselves as fee-only, it means they are pledging to you that the only compensation they receive is that which you pay them directly. In other words, they will receive no commissions from the products and services they recommend. This eliminates the worry that a product or service is being recommended because of the high commission it pays.
While commission based compensation has the most egregious conflicts of interest, it should be noted that even fee-only compensation methods have conflicts.
- Assets under management – has a bias towards greater leverage and debt
- Portfolio performance – favors high risk, high return bets
- Hourly – favors making mountains out of molehills (i.e., making busywork)
- Flat Retainer – favors doing the least work
My pledge to you is to eliminate conflicts of interest wherever possible and when one is inevitable to make you aware of its existence so you can judge my advice in context.
As always, my goal is to do everything in my power to ensure you get the best advice possible.