Fee Only

Only two compensation systems exist in the financial arena, commissions
and advisory fees. ("Fee-Based" firms have blended the two).

Insurance Agents, Brokers, Registered Representatives (many times
using the term "advisor" on their business card) are all actually sales
people that represent either a financial product manufacturer, a product
distributor or both. The term "Independent" can also be misleading.
Independent broker or Independent advisor typically means that the
Broker/Dealer doesn't force the rep. to use the Broker/Dealer's brand.

The Advisor that charges only fees represents only the client.

Brokers at, Merrill Lynch, Goldman Sachs, Edward D. Jones, Wachovia
Securities, Prudential,  and others are registered representatives who
represent that broker/dealer. Not only do these firms underwrite securities
(companies that they have brought to the market, which of course become
"wise investments" for their clients) but they also distribute other financial
products, such as AIM, Putnam, Oppenheimer or Fidelity mutual funds ... all
for a commission or a share of the profits. Firms such as this do typically
register as investment advisors, but offer a combination of advisory fee
services and commission based products.

The Advisor that charges only fees never accepts commissions from the
investments and/or methods recommended.

The Advisor, consultant, etc, working in a bank is also typically a
commission sales person. And, again, the bank's broker/dealer or the
advisor has registered as an advisor, but does not offer those services to the
average middle income investor or blends advisory fees and commissions
from selling products. Again, the temptation to maximize compensation
through product selection still exists in the banking environment. Small
banks and others who have aligned with a fee-only advisor (a growing
number but still few and far-between) have done the right thing. Just ask at
your bank (and ask for it in writing),

Insurance companies too typically work with,or own, a broker/dealer, so
that the agent can license as a registered rep and sell mutual funds and
variable annuities for a commission. And of course the insurance sale
(except for the no-load products available to Registered Investment Advisers)
is a commissioned sale too. By the way, most brokerage houses and banks also  
license their reps as insurance agents and receive a cut of the commission
for distributing the policy OR they may own their own insurance agency).

Only Fee-Only advisors charge the same fees across the board, based on
hours spent,or as a flat fee based on the complexity of the financial plan,
research or other service, regardless of the financial products or
strategies recommended.

And by using the no-load or institutional products available to Registered
Investment Advisers, the low management fees of those products PLUS the
advisory fee charged by the advisor is less costly than the commissions
and product fees on the commission based products.

To add to the problem, each broker/dealer, insurance company or bank
can only sell what it creates or distributes for another firm. So not only does
the temptation exist to place the client in the product that maximizes
commission, they can never examine and facilitate ALL the investment
opportunities in the universe. That, alone, can equate to lower returns.

Be sure that your advisor doesn't accept commissions.. That's the only way
you're really paying for advice and not for the investment or other financial
product. AND don't be fooled by the term "Fee based," where the provider
has blended commissions and fees.

What those companies provide is not objective and it's not really advice. It's a
sales person "advising" you to buy their product.