What Is a Fee-Only Financial Advisor?

The way your financial advisor is compensated directly affects the advice you receive. Fee-only advisors have no financial incentive to recommend one product over another because they don't earn commissions. This contrasts with fee-based advisors (who may earn both fees and commissions) and commission-only advisors (who are compensated entirely through product sales).

For Arizona retirees making high-stakes decisions about retirement income, Social Security timing, Roth conversions, and estate planning, knowing that your advisor's recommendations are free from commission-based conflicts provides an important layer of protection.

Fee-only advisors typically charge through one or more of these structures:

Assets Under Management (AUM): A percentage of the assets they manage for you, typically 0.5% to 1.5% annually. For example, on a $500,000 portfolio, a 1% AUM fee is $5,000 per year.

Flat fee or retainer: A fixed annual or quarterly fee for comprehensive financial planning, typically $2,000 to $7,500 per year regardless of portfolio size.

Hourly rate: A per-hour charge for specific planning work, typically $150 to $400 per hour. Good for one-time consultations or specific questions.

Project-based fee: A one-time fee for a specific deliverable like a comprehensive financial plan, typically $1,500 to $5,000.

To verify fee-only status, check the advisor's Form ADV (available on the SEC's IAPD website), which discloses compensation methods. Members of the National Association of Personal Financial Advisors (NAPFA) are required to be fee-only.

Arizona has a growing community of fee-only financial advisors, particularly in the Scottsdale and Phoenix metro areas. You can search for fee-only advisors through NAPFA (napfa.org), the Garrett Planning Network, or by checking Form ADV filings with the Arizona Corporation Commission's Securities Division.