2022 | What Exactly Is a Fee-Only Financial Advisor?

2022 | What Exactly Is a Fee-Only Financial Advisor?

The financial advisor model has changed a lot over the last several decades. From the investor’s perspective, these changes provide more options and services. However, knowing exactly what your advisor can do for you has never been more confusing. 

A brief history lesson – until the 21st century, the public’s typical relationship with an advisor was a stockbroker who bought & sold securities on their behalf. Large insurance companies were also selling policies and securities through advisors earning commissions. Advisory was limited to investment selection and maybe some retirement projections. More recently, investors demand for compressive planning spawned a new era of financial advice – the fee-only fiduciary whose focus is on maximizing the client’s net worth, not selling products. 

HCO is proud to be a fee-only fiduciary. The fee-only fiduciary advisor gets paid to provide advice to their clients, whether in financial planning, asset management, or both. The fiduciary standard is a vital piece of this. To adhere to the fiduciary standard, an advisor must always put a client’s interest above their own. Fee-only advisors get paid exclusively by their clients and don’t receive commissions or kickbacks from recommending certain products or services.

Trust is at the heart of all financial advisory relationships. As an investor, you want to find an advisor that you can trust, and a transparent fee structure is a critical part of that.

Advice is The Core

While investment management has been the industry’s focus for years, proper holistic financial planning was often only available to investors with tremendous wealth. Today, the fee-only model is bringing more advice back into the mix. More advisors are tailoring their service offerings and client relationship models to focus on a more holistic, accessible form of advice rather than strictly investment management.

We believe financial advice is more than asset selection and portfolio management. Holistic financial advice helps families maximize their financial opportunities through investment management, tax minimization planning, asset protection strategies, and estate planning.

An advisor now may act as a family CFO, helping you understand and manage your entire financial picture. 

And It’s in Your Best Interest

One of the most significant benefits of working with a fee-only fiduciary is the lack of conflicts of interest. The definition of fiduciary is “a person who holds a legal or ethical relationship of trust with one or more other parties.” While it may be surprising, not all financial advisors are fiduciaries.

When advisors earn their income from recommending certain products over others, there’s an inherent conflict of interest. The concern is that it’s tough to know as an investor if the product is truly in your best interest or if it generates the most commission for the advisor. Fee-only helps remove this conflict of interest.

The Takeaway

It’s easier to invest now than ever, but creating a successful financial plan remains complex and should be rooted in your situation, goals, and risk tolerance. Fee-only, fiduciary financial advisors can help you build your wealth at any stage, for any goal – and you’ll always know they are acting in your best interest. 

This work is powered by Seven Group under the Terms of Service and may be a derivative of the original. More information can be found here.

The information contained herein is intended to be used for educational purposes only and is not exhaustive.  Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return.  If applicable, historical discussions and/or opinions are not predictive of future events.  The content is presented in good faith and has been drawn from sources believed to be reliable.  The content is not intended to be legal, tax or financial advice.  Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA.

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