When most people start looking for a financial advisor, one word comes up again and again: fiduciary.
You’ll often hear that you should “only work with a fiduciary advisor.” That’s good advice — but it’s not the only factor that matters.
The truth is, several types of financial advisors can operate as fiduciaries, yet they may still charge clients in very different ways. And those fee structures can affect how transparent the relationship feels, how advice is delivered, and ultimately, whether the advisor is the right fit for you.
Let’s break down what “fiduciary” really means — and how it intersects with the main advisory models: flat-fee, project-based, and AUM-based advisors.
What Does “Fiduciary” Actually Mean?
A fiduciary financial advisor is legally and ethically required to put their clients’ interests ahead of their own. That means:
- They must recommend what’s best for you, not what earns them the highest compensation.
- They must disclose conflicts of interest and act with transparency.
- They’re held to a “best-interest” standard — not just “suitability.”
All fiduciaries are bound to this higher standard, but not all fiduciaries charge the same way.
That’s where understanding fee structures becomes critical.
The Three Layers of How Advisors Work
Before we compare models, it helps to visualize how financial advice is structured.
Every advisor relationship can be broken down into three layers:
- Compensation Philosophy: Who pays the advisor — you or a product company?
- Fee Structure: How the fee is calculated (flat, hourly, asset-based, etc.).
- Service Model: What you actually receive — one-time advice or ongoing management.
These layers combine to define your experience and determine whether an advisor’s incentives are truly aligned with your goals.
1️⃣ Compensation Philosophy: Fee-Only, Fee-Based, and Commission
Fee-Only Advisors (Always Fiduciaries)
- Paid directly and only by the client.
- No commissions, no product incentives, no third-party compensation.
- Must operate as fiduciaries 100% of the time.
Fee-Based Advisors (Sometimes Fiduciaries)
- May charge planning or AUM fees but also receive commissions for certain products.
- Fiduciary duty can apply only part of the time (for instance, when managing assets, but not when selling insurance).
Commission Advisors (Not Fiduciaries)
- Paid through product sales, such as mutual funds, annuities, or insurance.
- Held to a lower “suitability” standard — the recommendation only needs to be suitable, not necessarily best.
If you want fully objective advice, “fee-only fiduciary” is the most transparent standard — but that’s just the foundation.
2️⃣ Fee Structure: How Fiduciary Advisors Charge Differently
Even among fiduciaries, how you pay them can vary — and that has real-world implications for transparency and alignment.
🟢 Flat-Fee Fiduciary Advisors
Flat-fee advisors charge a fixed annual or monthly fee that covers ongoing planning and investment management — regardless of portfolio size.
They are always fee-only fiduciaries, meaning their advice isn’t tied to selling products or managing a larger account balance.
Pros:
- Transparent and predictable pricing.
- No incentive to keep assets invested just to earn a higher fee.
- Ideal for clients who want comprehensive, long-term advice without percentage-based costs.
Cons:
- Flat fees can feel high for smaller portfolios, since the cost doesn’t scale with assets.
Best Fit:
Professionals and families seeking a fiduciary advisor who offers ongoing planning and investment guidance for a transparent flat rate.
🟡 Project-Based or Plan-Only Fiduciary Advisors
These advisors also operate as fee-only fiduciaries, but instead of an ongoing relationship, they provide a one-time plan or consultation.
You receive a financial “prescription” — then you implement it yourself.
Pros:
- One-time or hourly cost — no long-term commitment.
- Ideal for DIY investors who want professional validation of their approach.
Cons:
- No ongoing accountability or plan updates.
- You’re responsible for execution and portfolio oversight.
Best Fit:
Confident self-directed investors who prefer guidance without delegation.
🔵 AUM-Based (1%) Fiduciary Advisors
AUM advisors typically charge around 1% of the assets they manage on your behalf. Many are also fee-only fiduciaries, though some are fee-based.
Their fiduciary duty applies to managed assets, but their incentives are linked to portfolio growth — meaning they’re rewarded as your assets increase.
Pros:
- Hands-off experience: advisor manages everything.
- Ongoing relationship and behavioral coaching.
Cons:
- Costs rise as your portfolio grows — even if service level stays constant.
- Potential bias to keep assets under management rather than recommending debt payoff or outside investments.
Best Fit:
Investors who prefer to delegate portfolio management entirely and are comfortable with variable, percentage-based pricing.
3️⃣ Service Model: One-Time vs. Ongoing
| Service Type | What You Get | Common Fee Structures | Fiduciary? |
|---|---|---|---|
| One-Time / Project-Based | Financial plan or analysis | Hourly or flat project fee | ✅ Yes (Fee-Only) |
| Ongoing Flat-Fee | Continuous planning + management | Flat annual or monthly | ✅ Yes (Fee-Only) |
| AUM-Based (1%) | Continuous management + planning | % of assets managed | ✅ Often, but not always |
| Commission-Based | Product transactions | Commissions | ❌ No |
Why “Fiduciary” Isn’t the Only Filter
While fiduciary status is crucial, it’s just the starting point.
Two fiduciary advisors could give you very different experiences depending on how they’re compensated and what services they provide.
That’s why, when evaluating advisors, it’s worth asking:
- How do you charge — flat, hourly, or percentage-based?
- Do you receive any commissions or third-party payments?
- What’s included in your ongoing service?
The answers reveal not just fiduciary intent, but how the advisor’s incentives align (or don’t) with your needs.
Choosing the Right Model for You
| If you… | Then consider… |
|---|---|
| Want full transparency and a predictable annual fee | Flat-Fee Fiduciary Advisor |
| Enjoy managing your own investments but want expert planning | Project-Based Fiduciary Advisor |
| Want a fully managed, hands-off experience | AUM-Based Fiduciary Advisor |
The Bottom Line
Working with a fiduciary means your advisor must act in your best interest — but the fee structure and service model define how that fiduciary duty plays out in practice.
Whether you choose a flat-fee, project-based, or AUM-based advisor, the best fit is the one whose approach matches your preferences for transparency, accountability, and control.
If you’d like to see what a flat-fee fiduciary approach could look like for your situation, we’re happy to help.