By Derrick Schuler, CFP®
When you hire a financial advisor, you’re trusting them with your money, your goals, and your future.
So, before you sign anything, ask the question that reveals more than almost anything else:
“How do you get paid?”
The answer matters more than most people realize. An advisor’s pay structure can shape the advice you get, the products you’re sold, and, ultimately, the results you see. Even without bad intentions, money can create bias. And bias in financial advice could cost you in the long run.
I’ve seen it firsthand. Dean and I both started in big brokerage firms and insurance companies, where sales quotas and product incentives shaped decisions. That’s why Dean founded Schuler Wealth Planning as a Fee-Only firm, and why I joined him. We wanted to give clients truly independent fiduciary advice, free from the conflicts of interest that come with corporate sales goals.
Here’s what you need to know about the different ways advisors get paid, and how those differences can affect you.
The Common Compensation Models in Financial Advice
1. Commission or Product-Based
These advisors make money by selling you products such as mutual funds, annuities, life insurance, and so on. They’re often limited to a company’s own offerings, which means fewer options for you.
Because commissions vary, their recommendations may be swayed by which products pay them most. That “free” financial plan? Often a sales pitch in disguise, designed to lead you toward a product that could cost you more in the long run.
2. Commissions and Fees (Fee-Based)
This hybrid model combines planning fees with commissions from product sales. While it might seem like a balanced approach, product incentives can still blur the line between advice and sales.
3. Salary (Plus Bonus)
Some financial advisors are paid a straight salary, often with the potential for a bonus. At first glance, this seems like a conflict-free structure, but in practice, that’s not always the case. Bonuses are frequently tied to sales goals or specific products that management wants pushed, which can influence the advice you receive.
If you’re considering working with a salaried advisor, be sure to ask follow-up questions such as:
-
- “How is the firm compensated overall?”
- “Are there sales quotas or performance metrics tied to bonuses?”
These questions can uncover hidden incentives and help you determine whether the advice is truly objective or still influenced by behind-the-scenes pressures.
4. Assets Under Management (AUM)
In the AUM model, advisors charge a percentage, typically around 1% annually (depending on the amount invested), of the assets they manage for you. For example, if you have $750,000 with them, a 1% fee would equal about $7,500 per year.
The potential conflict? They may prefer you keep money invested with them rather than using it to pay off debt, buy property, or set aside cash, because those moves reduce their fee. And as your account grows, so do their earnings, even if your needs and their service level stay the same.
5. Fee-Only
Fee-only advisors are paid only by you, the client. They don’t earn commissions, referral fees, or product kickbacks.
They can charge in different ways:
-
- Ongoing flat fees
- One-time or project-based fees
- Hourly rates
Because their income isn’t tied to selling products, fee-only advisors can focus entirely on your best interests. That’s why we believe it’s the most transparent, client-centered model available.
Why “Fee-Only” Protects You
Fee-only advisors have one goal: helping you reach yours.
You’re paying for a plan, not a product. While they may recommend investments or insurance, those choices are based on cost-effectiveness and fit, not on how much the advisor gets paid.
The result? Advice that’s objective, clear, and built entirely around you.
Questions to Ask Before You Hire an Advisor
-
- How do you get paid? (Look for a clear, direct answer.)
- Are you fee-only and a fiduciary at all times? (If the answer isn’t “Yes,” keep looking.)
- Do you receive any commissions or product-based compensation? (Fee-only = “No.”)
You can also verify through trusted directories like:
The Bottom Line
How an advisor gets paid isn’t just a detail, it’s the foundation of your relationship.
At Schuler Wealth Planning, we believe the Fee-Only model keeps your goals where they belong: front and center. No product quotas. No hidden fees. Just advice designed for your life, not for someone else’s bottom line.
IMPORTANT DISCLOSURE INFORMATION:
Past performance is not indicative of future results. All investments involve risk, and there is no guarantee that the strategies or investments discussed by Schuler Wealth Planning, LLC (“SWP”) will be profitable, match prior performance, be appropriate for your individual circumstances, or achieve intended outcomes. This content is for informational purposes only and does not constitute personalized financial, legal, or tax advice. SWP is not a law firm or accounting firm, and no portion of this content should be interpreted as legal or accounting guidance. Please consult with a qualified financial, legal, or tax advisor before making any financial decisions. A copy of SWP’s current written disclosure brochure describing our advisory services and fees is available upon request. Schuler Wealth Planning makes no representations regarding the accuracy, timeliness, or completeness of third-party content linked or referenced, and assumes no responsibility for errors or reliance on such information. If you are an SWP client, please notify us in writing of any changes to your financial situation, investment objectives, or account restrictions so we may update your plan accordingly.
