Template For A Business Plan That independence allows fee only financial advisors to provide impartial advice, since they are paid the same regardless of which investments you select. Commission based f.p., on the other hand, derive their income solely from the investments they recommend. It does not take a financial genius to recognize the inherent conflict of interest with this arrangement. While a commission based financial planner can provide solid advice, it is important for clients to understand the potential for abuse.
Fee based financial planners combine elements of fee only planners with elements of commission based planners. Like commission based planners, fee based planners derive income from commissions on the products they recommend. And like fee only planners, they are paid by their clients. Fee based financial planners therefore have the same potential for conflict of interest as their commission only counterparts.