Fee Only

Probably the most important philosophical tenet of Legacy Wealth Planning is our method of fee-only compensation. Financial advisors usually are compensated in one of three ways:

  1. Through fees (and only fees) paid to them by clients for their work. This is either as a percentage of investment assets under management and/or retainer fees for planning;
  2. Through commissions on investment and/or insurance products that are sold to clients; or
  3. Through a combination of fees and commissions usually referred to as fee-based where a percentage of assets under management is charged and the advisor also receives commissions for investments recommended in the portfolio.

As of January 2012 there were 635,405 Financial Advisors registered with the Financial Industry Regulatory Authority (FINRA). Only 1,478 advisors were Fee-Only, as listed with the National Association of Personal Financial Advisors (NAPFA) in 2012 and were compensated by method one above. That means 99.99% of advisors in 2012 were either partially or totally compensated through commissions (methods two and three above) that present a potential conflict of interest.