Fee-based vs fiduciary vs commission: what is the difference?
These terms get blurred on purpose. Here is the plain version, and exactly how Greenridge Wealth is paid.
Commission-based advisers are paid by the products they sell; fee-only advisers are paid only by clients; fee-based advisers are paid mainly by client fees but may also earn some commissions. Fiduciary describes a standard of care, acting in your best interest, that can apply across these models on the advice given.
The three payment models
They are not interchangeable, and the differences change the incentives.
- Commission: paid by product sales, which creates an incentive to sell.
- Fee-only: paid only by clients, with no product commissions.
- Fee-based: paid mainly by client fees, and may also earn some commissions, such as on insurance, which must be disclosed.
Where Greenridge Wealth stands
We are fee-based. We are compensated primarily by advisory fees, and our affiliates may receive commissions on insurance products. Rather than hide that, we disclose it, because a conflict you can see is one you can weigh. On the investment advice we give, we act as a fiduciary.
Why fiduciary is a separate question
Fiduciary is not a payment model; it is a duty to act in your interest. Ask any adviser, in writing, whether they are a fiduciary and how they are paid. The two answers together tell you most of what you need to know.
Common questions
Is fee-based the same as fee-only?
How do I check how an adviser is paid?
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