What is fee-only wealth management?

Fee-only refers to the nature of compensation. Fee-only wealth managers provide advice for a fee, similar to other professional service models. Fee-only wealth managers are not permitted to receive compensation for product sales.
Fee-only wealth managers generally explore broader financial topics, like retirement and investments, in the context of familial financial goals. FinancialFamilies employs a number of software tools to enable remote, informed, and efficient exploration of these topics. For example, conveniently scheduling meetings is as easy as clicking the link below!

What is the difference between fee-only advisors and fee-based?

You might think the difference between fee-only financial advisors and fee-based is nothing more than a simple word swap. Be careful, fee-based advisors may receive fees for providing advice and may also receive product revenue. Product revenue is a conflict of interest to advice in your family’s best interest. 

A fee-only financial advisor is not permitted to receive product-related revenue. This greatly strengthens their fiduciary ability to provide their best advice in the best interest of client families. It also frees the client family up to follow that advice without constant revenue-related assessments.

Several decades ago, the National Association of Personal Financial Advisors (NAPFA) coined the term fee-only. This description was designed to ensure families could identify an approach to consultation consistent with their intentions. Not long after, the competing fee-based term cleverly managed to confuse the issue. Both descriptions continue to be actively used. Discerning families benefit from clarifying this distinction.

Are wealth management fees worth it?

Increasingly so, especially once it becomes clear that not all fee-only financial planners charge the same fees. The wealth management business has evolved in good and important ways over the last several decades. At present, there is a slow drift away from assets under management fees. Families who have dutifully paid an assets under management fee for a while would be well served to compare fee and service levels with wealth managers who do not charge based on assets under management. The slow drift away from assets under management fees will continue and likely accelerate as more families discover that greater bang for their buck is a viable and sensible option.