What is a fee only advisor?

The Certified Financial Planner Board of Standards, Inc. (CFP Board) defines “fee-only” financial advisor as follows:  “A (CFP) certificant may describe his or her practice as “fee-only” if, and only if, all of the certificant’s compensation from all of his or her client work comes exclusively from the clients in the form of fixed, flat, hourly, percentage or performance-based fees.” Link. 

Simply put, a “fee-only” advisor is not paid a commission by a client or anyone else for transacting an investment recommendation. This seems straightforward enough given that commission-based compensation is a potential conflict of interest between advisor and client. Full, fair, and accurate disclosure of advisor compensation is a big deal to the CFP Board as explained in the Notice to CFP Professionals shown below  Download the Notice.

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