Fee-Only Financial Planning

Why is Fee-Only Financial Planning Better?

There are many reasons why a fee-only relationship with your financial adviser may work best for you.

We believe the fee-only approach is best for most people who are looking for unbiased independent advice. In any type of relationship where commissions are involved (including a “fee-based” compensation structure), the potential for conflicts of interest between you and your adviser is high.

Salesperson or Financial Adviser?

There are actually two separate issues to understand. The first is making a choice between a salesperson or an adviser.

There is a difference. If the person you are working with is a registered representative for an insurance company or broker, they are really a financial salesperson. Just like a car dealer, a financial salesperson is paid to sell you a product within the recommended list and may be influenced by the amount of commission they will earn on each product.

Rodgers & Associates, by contrast, is a Registered Investment Adviser. As a Registered Investment Adviser, we have a legal obligation to our clients to put their interests before ours, always. We act as a fiduciary for our clients at all times.

If there are any conflicts—either real or potential—between us and our clients, we are required to disclose them. To learn more about the differences between Registered Representatives and Registered Investment Advisers read the TD Ameritrade white paper on Understanding Financial Advice (pdf).

Who Pays Your Financial Adviser?

After the choice between salesperson or adviser, the second issue is how your adviser gets paid.

At Rodgers & Associates, we earn a fee for our advisory services that is paid directly by you. There are no commissions paid by you to Rodgers & Associates nor is there any other compensation earned by us. Our only allegiance is to our clients. We avoid relationships with any product provider so we cannot be influenced by them.

No arrangement can be totally free of conflicts, but a fee-only relationship eliminates many that get in the way of providing unbiased advice. As a fee-only adviser, the first fiduciary responsibility of Rodgers & Associates is to our clients. TD Ameritrade commissioned a study (pdf) a few years ago, and the results indicated that if consumers understood the differences, they would choose to work with a fiduciary by a very large margin.

For more information on a fee-only relationship please visit the website of the National Association of Personal Financial Advisors. Don't be afraid to ask your adviser or one you are considering if he or she is acting as a fiduciary for you.