Fee-Only vs. Fee-Based Advisors: A Comparison Guide for Arizona Retirees

One word separates the two most common advisor compensation labels — and it changes who pays your advisor, which standard of care applies, and where conflicts of interest can appear. This guide compares fee-only and fee-based side by side so you can evaluate any Arizona advisor with the same checklist.

The short definition of each model

• Fee-only: compensation comes exclusively from the client — a percentage of assets managed, a flat planning fee, or an hourly rate. No product commissions of any kind.
• Fee-based: the advisor charges client-paid advisory fees and may also receive commissions on insurance or brokerage products.
• Commission-only: compensation comes entirely from product providers when a product is purchased.

The fiduciary difference

Investment advisers are held to a fiduciary standard on advisory accounts, which requires them to act in the client's best interest and to disclose material conflicts. Insurance and brokerage recommendations are generally governed by other rules, including Regulation Best Interest, which also requires acting in the retail client's best interest but is a separate framework.

A fee-based advisor can therefore be a fiduciary on the advisory portion of a relationship while a different standard applies to an insurance recommendation. That is not automatically a problem — it is a reason to ask, in writing, which standard applies to each specific recommendation.

Side-by-side comparison

• Who pays: fee-only — the client only. Fee-based — the client, plus product providers on some transactions.
• Transparency: fee-only fees appear on statements. Fee-based commissions may be embedded in a product and require disclosure documents to see.
• Product access: fee-only advisors may not be able to offer certain insurance and annuity products. Fee-based advisors typically can.
• Conflicts: fee-only reduces product-driven conflicts. Fee-based requires disclosure and documentation of them.
• Typical cost: advisory fees in the Scottsdale and Phoenix market often run 0.50%-1.25% of assets per year; flat planning fees and hourly engagements are also common.

Which model fits which situation

If your plan is primarily investment management and financial planning, a fee-only structure keeps the compensation simple and visible. If your plan also calls for guaranteed income, longevity protection, or long-term care coverage, those solutions are usually available only through commissioned insurance channels — which means a fee-based or hybrid relationship, with full disclosure, may be the practical route.

The model matters less than the documentation. An advisor who hands you the numbers before you ask is generally a better sign than any label on a website.

Questions to ask any advisor you interview

• In dollars, what will I pay in year one, and how does that change over ten years?
• Are you acting as a fiduciary on this specific recommendation? Please confirm in writing.
• Do you or your firm receive third-party compensation related to anything you are recommending?
• May I review your Form CRS and Form ADV Part 2A?
• What would this plan look like if you were paid a different way?

How Solutions First Financial Group is structured

We are an independent firm. We act as fiduciaries on our advisory business and disclose all forms of compensation up front. We may also earn a commission when recommending insurance and annuity products. If you would like a written breakdown of what you are paying today, we are glad to review it with you.