In this episode, we're tackling the often-confusing world of advisor fees, clearing up the "alphabet soup" of terminology, fee-based, advice-only, flat fee, assets under management (AUM), commissions, and fee-only.

You'll get essential insights into what these different fee models mean, which conflicts of interest to watch for, and how to figure out which advisor structure suits your needs. We highlight the importance of understanding exactly what you're paying for and encourage you to look beyond just price, reliability and value matter, too! If you've ever wondered how financial advisors really get paid, or how to choose one that's right for you, this episode delivers all the answers.

Looking for help with Disability Insurance, Physician Banking, Student Loan Refinancing, Physician Mortgages, Contract Reviews, and more? Check out our "Best of the Best" sponsors page to find a list of the professionals Chad & Tyler team up with for their clients.

You will want to hear this episode if you are interested in...

• 00:00 Understanding fee terminology basics.
• 05:41 Financial incentives shape decisions.
• 06:24 Advisor relationships and compensation insights.
• 12:55 Comfortable self-directed investment management.
• 14:23 Challenges of the advice-only approach.
• 19:58 Hybrid fee models explained.
• 20:56 Questions to ask financial advisors.
• 27:48 Advisory fees vs. investment returns.

Understanding the Types of Advisor Fees

The financial planning universe is more nuanced than ever before, with new compensation models and hybrids popping up every year. It's important to distinguish between the various structures:

• Fee-Based: Advisors can sell products, earning commissions (like insurance), and also charge direct client fees.
• Advice-Only: Advisors provide flat-fee advice but don't manage investments or sell products.
• Flat Fee: Clients pay a straightforward dollar amount for services, either monthly, quarterly, or annually.
• AUM (Assets Under Management): Advisors charge a percentage of the investments they manage.
• Commission: Advisors are paid strictly by selling financial products.
• Fee-Only: All client costs are direct; no commissions from products or other entities.

Advisors may offer a blend of these models, so understanding what each entails, and the incentives they create, is a crucial first step.

Fee-Based Advisors: Wearing Two Hats

Fee-based advisors can earn money from both commissions (such as insurance, mutual funds, and annuities) and traditional fee arrangements. This hybrid approach is common among newer physicians who lack the assets for larger minimum fees but still need financial guidance.

While fee-based relationships aren't inherently bad, it's essential to be aware of the underlying incentives. If you go this route, clarity and full disclosure are your best protections, know what you're buying, the commission structure, and what (if any) ongoing service you'll receive.

Fee-Only and Advice-Only: Minimizing Conflicts of Interest

For physicians who want a relationship free of commission-driven biases, fee-only (especially advice-only) models are a breath of fresh air. In these setups, compensation flows exclusively and transparently from the client, limiting hidden conflicts.

Advice-only advisors focus solely on comprehensive planning, not asset management. This is ideal for the confident DIY investor, if you can stick to the plan without emotional reaction or procrastination. The challenge isn't getting a plan, but sticking to it as life and career inevitably create surprises and competing priorities.

AUM and Flat Fee: Clarity is Key

AUM-based fees charge a percentage of the investments managed. This "traditional" approach makes fees a moving target, but may align advisor incentives with your portfolio's growth. However, it's vital to understand whether these fees also cover ongoing financial planning or simply investment management. Too many physicians overpay for limited service out of habit or inertia.

Flat fee models, on the other hand, provide absolute clarity. Whether it's a single annual charge or a tiered structure based on income or complexity, you always know your costs.

Look for Reliability and Transparency

Choosing an advisor is about more than price, it's about aligning on values, expectations, communication, and service levels. Ideally, you're working with that advisor for decades...spend your time doing the research once.

The ideal advisor relationship isn't just about minimizing costs or maximizing returns, it's about trust, longevity, and peace of mind. Whether you're a new resident or a seasoned attending, the goal is the same: to understand what you're paying, what you're getting, and to feel empowered to periodically re-evaluate as life evolves.

The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don't expect!) about a sponsor, please let us know. We call it the "best of the best" for a reason, and we will maintain that standard for our listeners & viewers.

Connect With Physician Cents

• WealthKeel LLC
• Olson Consulting LLC
• Tyler Olson on Twitter
• Chad Chubb, CFP®, CSLP® on Twitter

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