Because the product invests other people’s money, the financial advisory industry is built on trust. One of the most effective ways financial advisor marketing can be used to build trust is through complete website transparency regarding how they are compensated and by whom.
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Financial advisors who operate on a "fee-only" compensation structure are often perceived as more transparent and better aligned with their clients' financial interests. While the core idea behind fee-only compensation is that no commissions are involved, there’s much more to it. Fee-only advisors provide objective advice free from the conflicts of interest arising when commissions are earned from selling financial products.
Because most investors turn to the Internet to find, screen, compare, and contact financial advisors, it is crucial that they clearly communicate their compensation structures online. A well-designed website that highlights a fee-only structure conveys transparency and builds trust with potential clients, setting the stage for a long-term relationship based on mutual best interests.
This article provides strategies financial advisors can use to market themselves as fee-only advisors on their websites.
What Is Fee-Only Compensation for Financial Advisors?
A fee-only financial advisor is compensated solely by the client through hourly fees, a fixed fee, or a percentage of assets under management (AUM). This means the advisor does not earn commissions from selling financial products like mutual funds, life insurance, or annuities. Instead, they are paid one of the types of fees for their knowledge, advice, and services.
Publish or Don’t Publish Fee Schedules on Financial Advisor Websites?
One of the most important questions for fee-only financial advisors is whether to publish their fee structures directly on their websites. Because transparency is a key selling point for fee-only advisors, publishing a clear and concise breakdown of fees can demonstrate a commitment to openness. However, some advisors worry that disclosing fees too early in the client relationship might scare off potential clients before they understand the value of the advisors’ services.
A more strategic approach might be to offer a general description of the fee structure on the website, highlighting the benefits of fee-only compensation—such as no commissions, transparent billing, and alignment with the client’s goals—without publishing the actual fee schedule. Advisors could then invite prospective clients to contact them for a more personalized discussion about their compensation and other expenses.
The 1% Fee Schedule That Incentivizes Advisors
A frequent compensation model for fee-only financial advisors is charging a 1% fee that is based on assets under management. This model aligns the advisor’s interests with the client’s, when the advisor’s compensation increases when the client’s portfolio grows. In other words, the advisor is incentivized to manage the client’s assets wisely and help them achieve financial growth.
This straightforward, percentage-based fee appeals to many clients because it clearly explains what they will pay. Advisors can use this model to showcase their commitment to long-term financial growth for the client and themselves. By clearly explaining their website’s 1% fee structure, advisors can illustrate how their compensation aligns with the client’s success, further building trust and transparency.
The Minimum Fee
Establishing a minimum fee is essential for financial advisors with smaller clients or those just starting out to ensure that their services are profitable. The minimum fee could be a flat annual or base fee for clients with lower AUM.
Marketing this minimum fee online can be tricky but effective. Financial advisors should clearly explain the rationale for their minimum fees, emphasizing the value of comprehensive financial planning and the personalized services their clients will receive.
This highlights that smaller investors still get access to high-quality, fiduciary-level advice, even with a minimum fee, and can attract clients otherwise excluded from the financial advisors’ services.
The 99:1 Ratio
99:1 is an effective way to display the financial relationship between investors and their financial advisors.
An investor has a $1,000,000 portfolio with a financial advisor. The portfolio has appreciated $100,000, or 10%, in the past year. This benefits both the investor and the financial advisor, but not equally - for example, 50/50.
$99,000 goes to the investor, and $1,000 goes to the financial advisor.
This is the 99:1 relationship that benefits investors 99 times more than it does financial advisors in rising markets.
The Sliding Schedule of Fees
Just about every financial advisor charges a sliding schedule of fees for their knowledge, advice, and services. For example, they charge 1% on the first million of assets, .75% on the next two million, and .50% on amount over three million.
This is an important point that should be communicated on financial advisor websites. The more assets they invest the lower the incremental fee.
Transparent Fee Arrangements
Transparency is the hallmark of the fee-only model. Financial advisors should prominently feature their fee structures on a dedicated page on their websites.
A clearly described, online fee structure builds trust and demonstrates that the advisor is committed to being upfront about expenses. Prospective clients will appreciate knowing how much they are paying and what they are paying for, making it more likely that they will reach out for an initial interview.
Quarterly Billing in Arrears
Another common practice among fee-only advisors is billing clients quarterly in arrears, meaning clients are billed at the end of each quarter based on the services provided during that time period.
This approach ensures that clients pay for actual services rendered rather than prepaying for services that have yet to be delivered.
Advisors should explain the benefits of quarterly billing on their websites. This method highlights their confidence in the value they provide since they bill after services are completed. Advisors can further demonstrate their commitment to transparency and accountability in their client relationships by discussing quarterly billing in arrears.
Layers of Fees
Financial advisors should be cautious about "layers of fees"—additional charges that can accumulate when clients invest in certain services. For example, an investment with a Separate Account Manager generates an additional fee plus a custodial fee.
Advisors who operate under a fee-only model can use their websites to clarify that the fees are necessary to protect investors. For example, the services of a brand-name custodian (Schwab, Fidelity, Pershing, LPL) are necessary services that also benefit clients. Fees are paid directly to third parties and are reported to their clients each month.
The Month-to-Month Relationship
Fee-only financial advisors often offer flexible arrangements, including month-to-month relationships. This allows clients to receive ongoing financial planning and investment management services without signing long-term contracts.
Month-to-month arrangements allow clients to end the relationship if they are unsatisfied with the results, further emphasizing the advisor’s confidence in their ability to deliver enough value to justify their fee.
Advisors can promote these flexible terms on their websites to attract clients who are hesitant about committing to long-term contracts with firms they may have just met. Highlighting the lack of pressure and the focus on client satisfaction can help convert website visitors into clients.
Fee-Only Advisors are Financial Fiduciaries
The same registration that allows financial advisors to charge fees also makes them financial fiduciaries. This means they are legally and ethically bound to always act in their client’s best interests.
This duty distinguishes them from other types of advisors who may only be required to recommend "suitable" products, which might not always be the best option for the client.
Advisors should prominently feature their fiduciary status on their websites. A clear, bold statement about acting in the client’s best interest can set a fee-only advisor apart from others in the industry, especially if backed by certifications like the CFP® designation, which further enforces fiduciary standards.
Reduced Conflicts of Interest
While no financial advisor may be conflict-free, a fee-only compensation model can significantly reduce the potential for conflicts of interest. Since advisors do not receive commissions or revenue sharing from third-party product providers, their recommendations are solely based on what is best for their clients.
Advisors can use their websites to emphasize the reduced conflicts of interest inherent in their fee-only compensation models. By explaining that their advice is objective and free from third-party influence, they can build trust with prospective clients damaged by commission sales representatives in the past.
Planning & Investment Services
Fee-only advisors offer comprehensive financial planning and investment management services, which can be fully integrated into their fee structures. Advisors can emphasize that clients pay for the full scope of services—from retirement planning to tax strategies to portfolio management—rather than just selling particular financial products.
Paid by the Client, Not a Third Party
The most significant aspect of fee-only compensation is that advisors are paid by their clients and not by third parties like mutual fund companies or insurance providers. This creates a direct relationship where the advisor is accountable to the client, not to product providers.
Advisors should highlight this fact on their websites, explaining that their sole commitment is to the client’s financial success, without external influences.
Incentivizing Advisors to Produce Results
Since fee-only advisors often charge based on AUM or flat fees, they are incentivized to help their clients grow their assets and achieve their financial goals. Advisors can use this on their websites to reinforce their commitment to results-driven financial planning and investment advice.
Tying a Fee-Only Compensation Model to Digital Marketing
For Registered Investment Advisors (RIAs), how they present their fee structures and compensation models on their websites is crucial to building trust with potential clients. The clarity and transparency of a fee-only model should be mirrored in their digital marketing efforts, from their website design to their messaging and follow-up. By emphasizing their fee-only status, advisors can differentiate themselves in a crowded market, creating appeal for clients who are seeking financial advisors who provide unbiased advice and long-term financial partnerships.
Ultimately, a well-designed, transparent website can serve as a powerful tool for marketing fee-only services, creating trust, and driving client engagement in the competitive world of financial advise
