What Is A Fee-Only Financial Advisor & Why Does It Matter?

Maura Schauss |

By Todd I. Youngdahl, CFP®

If you’ve spent any time researching financial advisors, you’ve probably come across the term Fee-Only. It’s used to describe registered investment advisors, and it’s one of the best words you can hear when searching for a financial expert.

But what does it mean? And why is it important when you are evaluating financial advisors?

Today we’ll address what it means to be a fee-only financial advisor—and why we at Washington Wealth Advisors pride ourselves on this one little phrase.

What Does Fee-Only Mean?

Fee-only financial advisors are paid directly by their clients. They don’t receive any types of kickbacks or commissions for recommending certain securities or investments.

The National Association of Personal Financial Advisors (NAPFA) believes fee-only financial advisors are the most transparent and unbiased advisors you can come by.

They typically have one of two titles: either registered investment advisor or certified financial planner. If your advisor has one of these titles, you can rest assured that they’re fiduciaries and only have your best interest at heart.

How Are Fee-Only Advisors Paid?

There are a few different ways fee-only advisors get paid. Some popular methods include:

Hourly

You pay a fixed amount based on the number of hours your advisor spends meeting with you.

Flat fee

This is similar to the hourly method, but you pay one flat fee no matter how many hours you spend meeting with your advisor.

Percentage of assets under management (AUM)

You pay a percentage-based fee depending on the value of your investments. This fee is typically around 1%.

What Are The Benefits Of A Fee-Only Advisor?

If you’re in the market for a financial advisor, here are three reasons why you should choose a fee-only advisor:

1. No Conflicts Of Interest

No matter how pure an advisor’s intentions are, it can be hard to provide unbiased 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. They’re Fiduciaries

Fee-only advisors are fiduciaries, which means they’re legally and ethically required to act in your best interest at all times. They’re loyal, quick to disclose any conflicts of interest, and only give advice based on your unique situation and goals. 

3. You Get 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 WWA Is Fee-Only

At Washington Wealth Advisors, we have our clients—and our clients only—in mind. We pride ourselves on transparency and unbiasedness. We give our clients our undivided loyalty and are dedicated to helping them reach their financial objectives.

Whether you have a specific financial concern or need help developing a full-blown financial plan, we’re here to guide you every step of the way. To get started, call our office at 703.584.2700 or email clientservices@washingtonwealthadv.com. Or schedule a meeting with Todd.

About Washington Wealth Advisors

Washington Wealth Advisors is an independent registered investment advisory firm serving high net worth families and small businesses. We focus on holistic financial planning and comprehensive investment management. Leveraging our core strengths of unbiased, active investment management together with a detailed annual financial planning capability, we serve your comprehensive investment and financial planning needs.