Should You Use an Advice-Only Model as a Financial Advisor?

More advisors are rethinking how they charge for their services, and the advice-only model is leading that shift. Instead of charging based on assets under management (AUM) or earning commissions from product sales, advice-only financial advisors offer guidance for a flat fee or hourly rate. This model is gaining popularity as clients look for transparency and flexibility in how they pay for financial support. Below, we’ll cover:

• What advice-only planning is
• Why it’s gaining popularity
• How to decide if it could be a good match for you

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What is the Advice-Only Model?

An advice-only financial planner offers services without managing money or selling products. Instead of earning a percentage of assets or receiving commissions, they charge a flat fee or hourly rate for their time and expertise. This setup means clients get advice unrelated to account size or product sales. 

Advice-only advisors act fiduciarily, putting their clients’ interests first. They focus on helping people make the best financial decisions for their goals. 

Unlike fee-based or commission-based models, advice-only planning provides support without strings attached. It’s a way to work with clients who want help, but also want to stay in control of their finances.

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Key Benefits of the Advice-Only Approach

Working as an advice-only planner comes with different rewards. You can connect with clients in new ways, set your own pace, and stand out among other advisors. Here are some other benefits to consider:

Reduced Conflicts of Interest

Advice-only planners don’t sell products or manage portfolios, so there’s no pressure to steer clients in a certain direction. That helps keep the focus where it belongs: the client’s goals. When people know you’re not getting paid to promote something, it builds a stronger sense of trust in your objective guidance. 

Transparency and Simplicity

Clients know exactly what they’re paying for and why. Fee percentages and commissions can make the process complicated for clients. Services that are easy to explain and understand create lasting relationships based on clarity and shared expectations.

Greater Flexibility and Control

Advice-only advisors decide how they want to work. You can design your business to serve clients who don’t always fit the AUM mold, like younger professionals or DIY investors. You also skip the stress of portfolio management and market swings. 

Market Differentiation

Very few advisors use the advice-only model, which makes it a standout option in a crowded field. It’s a good fit for clients looking for something different, especially those who value guidance but want to handle their own investments. With only about 1% of advisors using this approach¹, it creates a clear way to set yourself apart. 

Common Challenges of the Advice-Only Model

There are many positives to the advice-only model. However, be sure to consider the hurdles you’ll need to overcome.  Educating potential clients and keeping your pipeline full are prominent examples. Let’s explore some of the most common challenges: 

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Client Education and Market Awareness

Lots of people still aren’t familiar with the idea of paying for advice only. They might expect you to manage their money or sell them something. As an advisor, part of your job is helping them understand how this model works and why it’s valuable. That takes time and effort, especially when building your brand and messaging.  

Responsibility for Implementation

In this model, the client is responsible for implementing your advice. Some may follow through quickly, while others might be slow to act or get stuck in the process. Give clear, realistic steps and help clients stay motivated. You’re offering support, but not managing the details for them. 

Ongoing Client Acquisition

Advice-only planners don’t usually rely on recurring income from asset management or product sales. That means you’ll likely need to attract new clients more frequently or find new ways to reengage past ones. As a result, marketing and outreach will be a regular part of your job, not just something you do when starting.

Is the Advice-Only Model Right for You?

This model isn’t for everyone. Some advisors find it perfectly fits their style and goals, while others might prefer a more traditional setup. Here’s how to think through whether advice-only planning matches what you want for your business.

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Signs an Advice-Only Model May Be a Good Fit

1. You enjoy teaching and giving people the tools for success. 
2. You like working with clients who want to be involved in their finances and value transparent, upfront pricing. 
3. You want more control over your time, don’t want to manage portfolios, and prefer to focus on planning

When a Traditional Model Might Be Better

1. You might prefer a structure where clients hand off more responsibility and stay engaged over time. 
2. Your strengths include managing investments or offering full-service wealth planning 
3. Advisors who focus on high-net-worth households or want long-term AUM relationships might also find more stability in a different setup

Choosing the Right Fit for Your Practice

If you’re between the advice-only model and other, more traditional options,  look at how you want to work, who you want to serve, and what kind of business you want to build. There’s no perfect path, but knowing what matters to you makes the decision easier. 

Key Takeaways

• The advice-only model focuses on planning, not product sales or portfolio management.
• It offers more independence and clarity but requires consistent outreach and client education.
• Reduced conflicts of interest lead to stronger, more objective relationships.
• You’ll need a clear plan to explain your value and attract the right clients.
• This model works well for advisors who value flexibility, transparency, and direct service.

Action Items

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