The Truth About How Financial Advisors Get Paid
“How do you get paid?”
That’s one of the most common questions I get. And honestly, it’s a really good one. Because if you’ve talked to other advisors and it seemed like they weren’t making money off you… surprise: they are.
As my dad always says, “There’s no such thing as a free lunch.”
Money is leaving your pocket and ending up in theirs, it’s just a matter of how.
“Show me the incentive, and I’ll show you the outcome.”
– Charlie Munger
Incentives shape behavior, whether we like it or not. When someone’s paycheck depends on selling you something, you can bet that paycheck plays a role in the advice you get.
The Commission Model
Think of it like going to a mechanic.
Sometimes you really do need new brakes. But sometimes… you walk away wondering if those “extra repairs” were more about your car, or their commission.
That’s why trust matters. When you’ve built a relationship with a mechanic who you know is protecting you without overcharging, you feel confident their advice is in your best interest. Financial advice should be the same way.
That same system shows up in financial advice. Many advisors earn commissions based on what investment product they put you in. Sometimes that product’s a solid fit. But sometimes… it’s just the one that pays them more.
Not All Commission-Based Advisors Are Bad
Now let me be clear, this isn’t to say “fee-only is the only way advisors can do business.”
There are a ton of advisors out there who get paid commissions and still do great work. People need certain products (like insurance) and advisors deserve to be paid for helping clients get them.
But here’s the key: the question “Is this the best thing for my client?” should always come first. And the hard truth is, for some advisors out there… it doesn’t.
The 3 Main Ways Advisors Get Paid
1. Commissions
How it works: The advisor gets paid when they sell you a financial product, like an annuity, life insurance, or certain mutual funds.
What it means for you: You may not see an upfront fee, but the cost is baked into the product. Sometimes it’s the right fit, sometimes it’s just what pays them most.
2. Assets Under Management (AUM)
How it works: The advisor charges a percentage of the investments they manage for you.
I’ve seen fees range anywhere from 0.25% to 2%.
Here at Ortman Finances, I charge between 0.5% and 1% depending on the amount of assets you have invested.
What it means for you: The advisor benefits when your accounts grow, but it can also create an incentive to keep as much money as possible invested (and not always prioritize things like paying off debt or buying a house).
3. Fee-Only / Flat Fee
How it works: You pay a clear monthly or annual fee for advice, no matter what products you use.
At Ortman Finances, my flat fees are $50, $100, or $150 per month depending on the package.
There are also fee-only firms that charge upwards of $10,000 annually, and they’re excellent at what they do. But not everyone can afford that, and not everyone needs that level of service.
My goal is to make high-quality, conflict-free financial advice accessible to people who are just getting started. Not just those with millions already in the bank.
Even Fee-Only Has Trade-Offs
No compensation model is perfect, even fee-only.
Flat fees remove the conflict of “selling products for a commission,” but they create other challenges. For example, an advisor might be tempted to take on too many clients at the same price and give each less attention. Or they may struggle with scope creep, when clients expect unlimited service beyond what the fee realistically covers.
That’s why the most important thing isn’t just how an advisor gets paid, but whether they’re clear and upfront about it. Transparency builds trust, and that matters more than the model itself.
Where I Fit In
At Ortman Finances, I work with both flat monthly fees and AUM (if I’m managing your investments). Either way, my goal is the same: full transparency, no surprises, and advice that always puts you first.
Closing Thought
There’s a reason this model is catching on.
People are tired of wondering who’s really benefiting from the financial advice they’re getting. At the end of the day, you should be able to trust your advisor (just like you’d trust a good mechanic) to charge you fair value and always put your best interest first.
So next time someone offers to “help” with your money, ask them:
“How are you getting paid?”
If they can’t answer clearly, that might be your answer.
