Let’s be honest, financial advisors don’t always make it easy to understand how they get paid. But that lack of clarity matters, especially when your financial life includes sizable assets and long-term goals. So today, we’re stripping away the confusion and showing you exactly how commission-based and fee-based pricing models work —so you can make a smart, informed decision.
Commission-Based: Product-Driven Compensation
Commission-based advisors earn money when you buy financial products; such as life
insurance, annuities, or mutual funds. They’re paid directly by the financial institution
behind the product.
Here’s what that looks like:
• You purchase a product from an advisor.
• The advisor gets a one-time or ongoing commission.
• There may be no upfront “planning” fee.
Pros:
• No out-of-pocket planning fee
• May be cost-effective for basic needs or one-time product sales
Cons:
• Potential bias toward products that pay higher commissions
• Less holistic financial advice
• You may wonder: “Is this what I need, or what they get paid to sell?”
Fee-Based: Plan-First, Client-First Advice
Fee-based advisors charge directly for their planning time, advice, and investment management; not for selling specific products. Their compensation comes from you, not the financial institutions.
Here’s what that might look like:
• You pay a flat fee, hourly fee, or a percentage of your assets under management (AUM)
• You receive comprehensive financial advice, even if you don’t buy a product
• Recommendations are tailored to your goals, not to a sales commission
Pros:
• Aligned incentives; when your account value increases, your advisor earns more
too
• Objective, comprehensive planning
• Fiduciary duty (they must act in your best interest)
Cons:
• May involve upfront planning or AUM fees
• Could feel like a bigger initial investment
Why It Matters for High-Net-Worth Professionals:
When your finances are complex, you need clarity and objectivity, not product pitches. If your advisor is being paid by a company to recommend a product, it may cloud the advice. But when your advisor is compensated for the plan itself, and for managing your assets, they’re more likely to:
• Recommend only what serves your goals
• Help you avoid unnecessary products or overlapping solutions
• Think big picture, long-term, and tax-efficient
The Wilcox Approach: Planning First, Products Second.
At Wilcox, we’re a fee-based firm because we believe trust and transparency matter more than quick commissions. We do occasionally use commissioned products (like life insurance) when they make sense, but they’re always part of a larger strategy, never the starting point. Our commitment: you’ll always know what you’re paying, why you’re paying it, and how it benefits you.
Because when your wealth is on the line, the structure of advice matters.
If you’re not sure which model you’re working with, or which is right for your situation, let’s talk. We’ll walk you through the differences in plain English. And help you feel confident in your next step.
Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC, member SIPC (www.sipc.org). Supervisory address: 300 Corporate PKWY, STE 216 N, Amherst, NY 14226. 716-276-1138. Wilcox Financial Group is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. This information is not a complete list of all possible fees and is for educational purposes. Additional fees may apply. You should review each product’s prospectus, offering document or other available information for any product that you are considering. Fees for Financial Planning Services are negotiable and are based on a variety of factors including the services selected and complexity of your situation. Your actual fee may differ and will be disclosed in your Financial Planning Services Agreement. A complete explanation of fees and services is available in the MML Investors Services, LLC Financial Planning Services ADV Brochure. CRN202811-9690372