Do fiduciary advisors charge commissions?
A true fee-only fiduciary advisor does not charge or accept commissions. Their entire pay comes from fees billed to you — usually a percentage of the assets they manage, a flat retainer, an hourly rate, or a project fee. There are no 12b-1 trails, no insurance overrides, no surrender-charge annuities, no revenue-sharing from fund sponsors, and no front-loaded commission classes of mutual funds. That is what "fee-only" means in plain English. A fee-based advisor is a different animal. They charge you a fee and also earn commissions on at least some products. They still owe you a fiduciary duty under the CFP Board rule, but their firm earns extra money when you buy certain things. Both arrangements are legal. Both are disclosed on Form ADV Part 2A Item 5. The labels are close on purpose, so you have to read the document, not the marketing copy.
What you should never see on a fee-only advisor's bill
If your advisor calls themselves fee-only, none of these should ever appear:
- 12b-1 fees. A 0.25% to 1.00% trail paid out of your mutual fund's expense ratio.
- Front-end loads. A 3% to 5.75% commission baked into "Class A" share purchases.
- Variable annuity commissions. A 3% to 10% commission paid by the insurance company at the sale.
- Insurance product overrides. Trailing commissions on permanent life, indexed UL, and similar products.
- Revenue-sharing. Payments from fund sponsors or platforms based on your assets.
If you see any of these on a statement or in an Item 5 disclosure, the firm is not fee-only.
Why some firms still take commissions
The honest answer: commission income is bigger and faster than fee income, especially on insurance products. Many "advisors" run a hybrid firm where the RIA side charges fees and the broker-dealer or insurance side earns commissions. The same person can switch hats during one meeting. The CFP rule and the SEC rule each push back on this, but they have not eliminated the model.
How to confirm there are no commissions
Two checks. First, ask in writing: "Do you or any related party earn any commission, 12b-1 fee, or revenue-sharing on what I buy?" Second, read Form ADV Part 2A Item 5. Words like "in addition to," "may earn," or "other compensation" mean commissions exist somewhere in the firm. Save the email reply with the Item 5 text. The two together give you a clear paper trail.