Broker Check

Pros and Cons of Fee-Only Financial Planning

As you search for the right financial planner, you should keep multiple factors in mind, such as level of experience and cost of services. One often overlooked element is the way in which your planner will collect his or her payment.

There are multiple ways in which a financial planner can be compensated: fee-only, fee-based, or commission-based. These options can be quite confusing if you don’t already know what they mean. Which one do you choose? Is one method of compensation more advantageous than others? We’ve compiled a comprehensive list to answer your questions and help you learn about the choices you have.

What Is a Fee-Only Financial Planner?

A fee-only financial planner is a practitioner that clearly outlines the amount to be paid, ensuring that the cost of services is transparent for the consumer. Typically, this amount is an agreed-upon rate: either a percentage of assets, a fixed hourly rate, or a fixed charge per task such as a financial plan or strategic tax analysis.

What Is Fee-Based Financial Planning?

While the two terms may sound similar, a fee-based financial planner is very different from a fee-only financial planner. A fee-based financial planner again has access to the type of visible fees mentioned above in fee-only financial planning, but can also receive other types of commissionable style investments intermixed.

The key takeaway here is that, with fee-based financial planning, it is not always fully transparent how the consumer pays for advice. With a mix between methods, misunderstandings and confusion can occur if fees are not disclosed and explained properly.

What Is Commission-Based Financial Planning?

Finally, we have commission-based financial planning. These financial advisors only make money when they sell you something. Therefore, commission-based financial planning is more of a transactional-style relationship, as compared to an ongoing collective partnership.

Pros of Fee-Only Financial Planning

All types of financial planners can be good or bad practitioners; however, fee-only financial planning tends to be the most consumer friendly—and undoubtedly the most transparent.


You obviously want to know where your money is going. Fee-only financial planning tells you exactly that. With fee-only financial planning, your financial planner will only be paid the mutually agreed-upon amount. This not only increases transparency but also improves your relationship with your advisor.

-Alignment of Interests

You and your advisor should be on the same team. Fee-only financial planning just makes that easier. Since your advisor knows the agreed-upon rate, he or she is incentivized to invest in relationships with clients. This includes reducing unnecessary, internal expenses and also encourages the advisor to make more proactive recommendations, making use of opportunities and protecting clients against risks. 


It is vital in the long run to ensure that your financial planner has your best interests at heart and is not subject to the whims of corporate profits. Fee-only financial advisors are much more likely to be independent and not answer to the mega bank mother-ship (i.e. their primary concern isn’t filling sales quotas). Independent advisors can typically choose from a wider array of investments, leading to greater access to the strongest building blocks to make your best possible investment portfolio.

Cons of Fee-Only Financial Planning

There are very few downsides of fee-only financial planning, and the pros greatly outweigh the cons. In terms of the other methods of compensation, fee-only financial planning outshines the rest.

-Not All Products Are Available

Occasionally, certain types of products can only be purchased in the traditional commission style. These examples include life insurance and some types of limited partnerships and other atypical types of investments. However, the number of products that fall into this category is rapidly decreasing due to regulators and consumer pressure.

Fee-Only Financial Planning in Plymouth, Minnesota

Ultimately, regardless of if a firm is fee-only or not, it is important that people find a financial planner who is individual to them: one who is not only capable of offering guidance through difficult situations but is also understanding and approachable. However, fee-only financial planning supports the process and functions by design as your advocate.

Are you ready to take the next step? Berger Financial Group offers fee-only financial planning, individually tailored to meet your specific financial goals. Contact us to learn more about what we can offer you with our personalized financial planning.

Get Started

Thank you! Oops!