Choosing the right financial advisor can feel overwhelming, especially when you’re navigating retirement planning or managing a lifetime of savings. With so many types of advisors—from traditional brokers to fee-based fiduciaries—how do you know which model serves your best interests?

In this episode of The Tom Dupree Show, Tom Dupree and Mike Johnson walk through the evolution of financial advising, explain the critical differences between fee-based and commission-based models, and share what you should look for when selecting an advisor. Whether you’re working with a large brokerage firm or considering a local registered investment advisor, this guide will help you make an informed decision about your financial future.

The financial advisory landscape has transformed dramatically over the past several decades. When Tom Dupree started in the business, the term “financial advisor” didn’t exist—only brokers.

“When I started in the business, it was a broker. There were no such things as advisors,” Tom explains. Back then, fee-based advisors served only the ultra-wealthy with accounts of $5-10 million or more. Everyone else worked with commission-based brokers.

Investors even held physical stock certificates and bonds in lockboxes at their banks. As Tom recalls: “I knew an older man who accumulated a lot of securities, bonds and stocks, and he kept them in his lockbox. He had to physically collect his own bond coupons.”

The late 1980s and 1990s brought significant changes:

This evolution created more choices for investors—but also more confusion about which advisor model best serves their needs.

Commission-based advisors earn money when you buy or sell investments. While not inherently wrong, this model creates potential conflicts of interest.

Key characteristics:

As Mike Johnson notes: “You the consumer need to be aware of what their incentive is. Some advisors are incentivized by transactions.”

Fee-based RIAs charge a percentage of assets under management rather than commissions on transactions.

Key characteristics:

“We manage money for a fee and we offer advice. We counsel with people,” Tom explains about Dupree Financial Group’s approach. “It makes it simple. We’re not trying to do other things that you don’t expect us to try to do.”

Many large brokerage firms now offer both commission-based and fee-based services, along with additional offerings like legal and accounting departments.

Tom cautions about potential conflicts with these one-stop-shop models: “If everybody is working under the same roof and getting paid by the same income stream, they’re gonna all pretty much march to the same company line.”

Your advisor’s compensation structure directly impacts the advice you receive. Understanding these incentives is crucial for retirement planning.

Commission-Based Incentives:

Fee-Based Fiduciary Incentives:

“The incentive for us, for example, is to mitigate risk, but to also try to earn a rate of return above the rate of inflation and hopefully the rate of withdrawal,” Mike explains. “It aligns with what our client’s interests are.”

A fiduciary is legally obligated to act in your best interest. This is the highest standard of care in financial services.

When you work with a fiduciary RIA:

Not all financial advisors operate with your best interests at heart. Here are red flags Tom and Mike have observed over 47 years in the investment business:

🚩 Lack of transparency about fees and compensation

🚩 Pressure to consolidate everything under one roof

Tom strongly advocates for separation: “I believe that it’s better to have a separate set of eyes looking at every legal document, at every piece of accounting information. I simply like to have a third party that has no relation to me as the investment firm.”

🚩 Unable or unwilling to explain investments in plain language

🚩 Discourages questions or second opinions

🚩 Focus on transactions rather than relationships

After nearly five decades in investment management, Tom Dupree identifies the key qualities retirees should seek:

Experience and Knowledge

“You want them to be smart enough to know their way around the business having done some things in the business,” Tom emphasizes.

Accessibility and Communication

“You should be able to ask that person a question, and they should be able to explain it to you in a way that you understand,” Mike notes. “And if they can’t, then they might not understand.”

Transparency

Personal Connection

“You have to somewhat like ’em. You don’t have to be in love with them, but you have to trust them,” Tom says. “You have to think that they are probably looking out for you.”

For nearly 18 years, The Tom Dupree Show has invited listeners into candid conversations about investment management, market conditions, and financial planning for retirement.

What sets Dupree Financial Group apart:

✓ Tom has 47 years of investment experience managing portfolios through multiple market cycles ✓ Fee-based fiduciary model that aligns our success with yours ✓ Personalized investment management tailored to your retirement income needs ✓ Local accessibility with face-to-face meetings in Lexington, Kentucky ✓ Independent third-party oversight for performance calculation and fee billing ✓ Transparent communication about what you own and why you own it

“Our clients tend to be a certain type of client. They are not generally super wealthy people. They’re not poor. They are what I would call average people, and I say that in a very good way,” Tom reflects. “They tend to, for me, represent a lot of what’s good about America.”

At Dupree Financial Group, client education is paramount. You should never feel confused about your investments or afraid to ask questions.

“Don’t ever assume that any question is a dumb question,” Tom advises. “Just what is a bond? That’s something that the answer may include a lot of things in it that the average person didn’t know was part of a bond.”

This educational approach helps clients stay the course during market volatility—a critical factor in long-term retirement success.

Before entrusting someone with your retirement savings, ask these essential questions:

About Their Business Model:

About Their Approach:

About Their Experience:

About Independence:

Some warning signs:

The financial services industry has evolved significantly, offering retirees more choices than ever. But with choice comes responsibility—the responsibility to understand who you’re working with and how they’re incentivized.

The evidence is clear: Fee-based fiduciary advisors offer the most aligned incentive structure for retirees focused on preserving capital and generating sustainable income. When your advisor only profits as your portfolio grows, you know their interests match yours.

As Tom powerfully states: “You’ve got to be able to tell your advisor it’s time to do something different. People are afraid of their advisor. If you don’t like us, we’ve got a guy that calls us all the time. You gotta tell them if you’re not happy with something, and I don’t care who it is.”

Your retirement is too important to settle for an advisor who doesn’t put your interests first.

At Dupree Financial Group, we’ve spent over 23 years helping people over 50 navigate retirement with confidence. Our fee-based fiduciary approach means we succeed only when you do.

What you’ll receive in your complimentary portfolio review:

“Markets are at record highs again. Here’s what 47 years in the investment business has taught me. The key isn’t timing the market. It’s understanding what you own and why you own it.” – Tom Dupree

Call us at (859) 233-0406 or schedule your complimentary portfolio review directly on our website at dupreefinancial.com.

Learn more about our investment philosophy and listen to more episodes in our market commentary archive.

Dupree Financial Group – Where we make your money work for you.

What’s the difference between a broker and a financial advisor?

Historically, brokers earned commissions on transactions, while financial advisors (particularly RIAs) charge fees based on assets under management. Today, many professionals use both titles, so it’s essential to ask specifically about their compensation structure and whether they act as a fiduciary.

Is a fee-based advisor better than a commission-based broker?

For most retirees, yes. Fee-based advisors acting as fiduciaries are legally required to put your interests first and are incentivized to grow your portfolio rather than generate transactions. However, the right choice depends on your specific needs and investment approach.

What is a fiduciary, and why does it matter?

A fiduciary is legally obligated to act in your best interest at all times. This is the highest standard of care in financial services. Non-fiduciary advisors must only recommend “suitable” investments, which is a much lower standard that allows for potential conflicts of interest.

How much should I expect to pay a financial advisor?

Fee-based advisors typically charge between 0.5% and 1.5% of assets under management annually.  This should include investment management, portfolio rebalancing, and financial guidance. Always ask for a complete breakdown of all fees.

Should I use the in-house attorney or accountant at my advisor’s firm?

Tom Dupree recommends against it. Having independent professionals provides additional checks and balances and ensures you’re getting unbiased advice. If everyone works under the same roof and compensation structure, they’re less likely to disagree with the advisor’s recommendations.

How do I know if my current advisor is right for me?

Ask yourself: Do I understand what I own and why? Can I ask questions freely? Do I trust my advisor’s recommendations? Is the fee structure clear? If you answer “no” to any of these, it may be time to seek a second opinion through a complimentary portfolio review.

What questions should I ask a prospective financial advisor?

Essential questions include: Are you a fiduciary? How are you compensated? What is your investment philosophy? How do you communicate with clients? What credentials do you hold? Can you provide client references? How did you manage client portfolios during the 2008 financial crisis?

Can I switch financial advisors if I’m not happy?

Absolutely. Your advisor works for you. If you’re not receiving the service, communication, or results you expect, you have every right to move your account. Most custodians make the transfer process straightforward, and a new advisor can typically handle most of the paperwork.

Why does local matter when choosing a financial advisor?

While technology allows for remote relationships, local advisors offer face-to-face meetings, personal accessibility, and a deeper understanding of regional considerations like Kentucky retirement planning. They’re available when you need them most and build genuine relationships over time.

What’s the advantage of an independent RIA over a large brokerage firm?

Independent RIAs like Dupree Financial Group are not tied to proprietary products or corporate sales quotas. They have the flexibility to choose the best investments for clients without pressure to meet firm-wide targets. They also typically offer more personalized service and direct access to decision-makers.

Catch new episodes of The Tom Dupree Show every week, where Tom Dupree and Mike Johnson discuss market conditions, investment strategies, and retirement planning with nearly six decades of combined experience.

Subscribe to our podcast to never miss an episode, and visit our website for our complete market commentary archive.

Dupree Financial Group is a registered investment advisor serving clients in Lexington, Kentucky and beyond for nearly five decades. This blog post is for educational purposes and does not constitute investment advice. Past performance does not indicate future results.

The post How to Choose a Financial Advisor: Fee-Based vs. Commission and What Retirees Need to Know appeared first on Dupree Financial.