Fee-only advisers are paid by the client alone, in fees, and take no commissions. Fee-based advisers charge fees and may also earn commissions on products, usually because they are also broker-dealer representatives or insurance agents. Commission-only brokers are paid by product sales. The difference shows in Form ADV Part 2A Items 5 and 10 and on adviserinfo.sec.gov, and it governs whose interest a recommendation can serve.
Three ways an adviser gets paid
| Fee-only | Fee-based | Commission | |
|---|---|---|---|
| Paid by | You, and only you | You and product providers | Product providers |
| How | A percentage of assets, a flat fee, or an hourly rate | Fees plus commissions on products sold | A commission or load on each sale |
| Registered as | Investment adviser (RIA) | RIA and broker-dealer rep or insurance agent | Broker-dealer rep or insurance agent |
| Standard of care | Fiduciary on the whole relationship | Fiduciary when advising; suitability or Reg BI when selling | Suitability or Regulation Best Interest |
| Where it shows | Form ADV 2A Item 5 lists fees, Item 10 lists no affiliations | ADV Item 10 lists a broker-dealer or insurer | No Form ADV — BrokerCheck only |
| Conflict | Bigger accounts pay more in dollars | Advice can lean toward what also pays a commission | The sale is the income |
The words sound alike on purpose. Fee-only is a term with a definition: the adviser is compensated solely by the client, in fees, and takes no commissions, trails, referral payments or product compensation of any kind. Fee-based was coined later and means the adviser charges fees and may also be paid by the products it recommends — usually because the same person is also a broker-dealer representative or holds an insurance licence. The two are one syllable apart and describe opposite arrangements.
How to check, in five minutes
- Search the firm on adviserinfo.sec.gov. If the person appears as both an investment adviser representative and a broker, they are dually registered — fee-based at best.
- Open Form ADV Part 2A. Item 5 is "Fees and Compensation." A fee-only firm lists its fee schedule and says it accepts no commissions. Item 10, "Other Financial Industry Activities and Affiliations," should be short.
- Ask the sentence. "Do you or your firm receive any compensation from anyone other than me?" A fee-only adviser says no. Anything longer than "no" is the answer.
Ours: Aduna Capital LLC is registered with the California DFPI as an investment adviser, CRD #311270, with no broker-dealer affiliation. The fee is 1.5%–2.0% of assets per year, published.
Fee-only is not automatically cheaper
It is worth saying plainly, because a page like this is usually written to sell fee-only advice. A percentage-of-assets fee on a large account can cost more in dollars over a decade than a one-time commission on a single product. Someone who needs one transaction and no ongoing advice may pay less to a commissioned broker. What fee-only removes is not cost; it is the reason to recommend one thing over another. Whether that is worth the fee depends on how much advice you actually need — and an honest fee-only adviser will tell you when the answer is "not much."
What "best interest" means on the sales side
Since 2020, broker-dealer representatives selling to retail customers are held to Regulation Best Interest, which is stricter than the old suitability rule but is a rule about each recommendation at the moment it is made, not an ongoing duty over the relationship. An investment adviser's fiduciary duty is continuous. Both are real standards; they are not the same standard.
Common questions
Is 'fee-based' the same as 'fee-only'?
No. Fee-only means paid by the client alone. Fee-based means fees plus, potentially, commissions. The terms are one syllable apart and describe opposite arrangements; check Form ADV Item 10.
How does Aduna Capital get paid?
Only by clients: 1.5%–2.0% of the assets we manage per year, billed quarterly and itemised. No commissions, no product fees, no referral payments. The schedule →
Is a fiduciary always fee-only?
No. Every registered investment adviser is a fiduciary when giving advice, including fee-based ones. Fee-only describes compensation; fiduciary describes the legal duty. Fee-only advisers are fiduciaries without the second hat.
Where do I see an adviser's fees in writing?
Form ADV Part 2A, Item 5. Every registered adviser must give it to you before or at the time you engage, and it is public on adviserinfo.sec.gov.
Want to see ours in writing?
The fee schedule is published, and Form ADV is one click away.