What is a Fee-Only Financial Advisor?
A Fee-Only financial advisor is paid in a different manner than an advisor selling commissioned investment products such as annuities. Fee-Only firms are paid by management fees based on the client's assets under management, or paid a flat hourly rate. There are NO commissions on transactions and no additional charges for financial plans or any of the other services. Fee-only advisors are not paid by the frequency of trades.
Both commission based and fee-based advisors sell insurance products and are paid with an initial commission each time they purchase a new investment product for their client. This can be detrimental to the client if the commission based advisor "churns" the investments. This is the unethical practice of selling a client a new investment product as often as possible to gain more commissions.