Advisor Pay

Who’s Really Paying Your Advisor?

When I worked for a large broker-dealer, a scenario regularly troubled me. A particular investment or annuity product might offer me a substantial commission. At the same time, I’d find myself wrestling internally, asking, "Is this really best for my client?" This tension isn’t just my own; it’s embedded deep within our industry’s fabric. Recent SEC enforcement actions against unsuitable annuity sales jumped by 38% between 2020 and 2024, highlighting this ongoing conflict between client best interest and advisor incentive structures.¹

Right now, clarity around how financial advisors get paid has never been more important. If you're entrusting your future, family, and finances to someone, you deserve transparency. By understanding advisor compensation models, you'll be better equipped to make wise choices aligned with your faith and values.

Understanding Advisor Compensation Models

As you consider financial planning, you’ll typically encounter four main advisor compensation models: commission-based, assets under management (AUM), hourly or project-based fees, and flat-fee retainers. Each has unique dynamics influencing the kind of advice you'll receive.

Commission-based advisors earn directly from product sales. These commissions might stem from insurance policies, mutual funds with loads, or annuities. This model frequently leads to a significant conflict of interest. Advisors under commission pressure may prioritize products offering higher commissions rather than those genuinely fitting your needs.

Assets under management (AUM) is perhaps the most common fee structure. Advisors charge a percentage (typically around 1%) of the total assets they manage for you.² While this aligns the advisor’s incentives somewhat with growing your portfolio, it can unintentionally reinforce a wealth-based identity. You and your advisor can quickly become overly focused on your account balance rather than your holistic financial well-being. You lowering your account balance by spending or giving, creates a pay cut for your advisor.

Hourly or project-based fees charge you only for specific advice sessions or defined projects. This model provides clarity, but advice can become fragmented and reactive, missing the continuity and deeper personal guidance most beneficial in long-term financial planning.

Flat-fee or retainer advisors charge a clear, set annual or monthly fee independent of your asset size or products purchased. According to recent data from the CFP Board, this model is becoming more common, rising from 22% to 35% of CFP® professionals over the last few years.³ It removes the incentive to sell unnecessary products or obsessively focus on your portfolio's size. Simply put, this model enables advisors to focus solely on what's genuinely best for you.

Why Fee-Only Matters for Faith-Driven Stewardship

As believers, our financial decisions reflect our stewardship. Scripture calls us to honesty and transparency: “Dishonest scales are an abomination to the Lord, but a just weight is His delight” (Proverbs 11:1). Fee-only advisors align with this biblical principle by eliminating hidden agendas. A Morningstar survey found that clients of fee-only planners reported 21% higher trust and 17% lower financial anxiety compared to commission-based advisors.⁴ This peace stems from knowing advice isn't motivated by hidden incentives.

Moreover, fee-only advice goes beyond mere investment management. It allows the advisor to help you holistically steward your finances—whether budgeting wisely, paying off debt, preparing for retirement, or planning generous giving strategies. The goal isn’t just wealth accumulation; it's aligning your financial strategy with your God-given identity and calling.

My Journey to Fee-Only Advising

When I founded Unburdened Financial Planning, I transitioned from commission-based advising because I longed to offer counsel that reflected Christ-centered integrity and holistic stewardship. Today, every client interaction begins not with financial statements, but with core questions: Who is God? Who does He say you are? And based on that, how should you manage your resources?

I've witnessed clients shift from stress to peace, from comparison to contentment. One family increased their charitable giving significantly once they saw their finances clearly through the lens of stewardship rather than performance. Another client confidently navigated retirement planning, knowing the advice was purely in his best interest.

Your Next Steps

Here's the bottom line: your advisor's compensation directly impacts the guidance you'll receive. Choosing a flat-fee fiduciary ensures your financial partner's interests align completely with your wellbeing.

I encourage you to take a closer look at how your advisor is paid and reflect prayerfully about whether this aligns with your values and goals. If you're uncertain or curious about working with a flat-fee-only advisor, consider scheduling a no-obligation conversation with me by clicking here. Together, we can explore how your financial stewardship can better reflect your faith and free you from financial anxiety.