Investing · Advisors

Fee-only vs commission advisors

Q: What’s the difference between fee-only and fee-based?

They sound alike but aren’t. Fee-only (also called advice-only) means the planner is paid only by you and sells no products or commissions — the most conflict-free model. Fee-based means you pay a fee (usually a percentage of assets) but the advisor may also earn commissions from products. The one word — “only” vs “based” — changes whose interests can creep into the advice.

How a financial advisor is paid tells you whose side they’re really on. Three models dominate in Canada — commission, fee-based, and fee-only — and the gap between them is the difference between advice that sells you something and advice that’s genuinely yours.

Updated June 2026

Canada doesn’t impose a blanket “fiduciary” duty that forces every advisor to put you first. Newer Client Focused Reforms tightened conflict-of-interest rules, but the surest way to know whose interests come first is still the simplest: follow the money. Here’s how each model pays out.

Commission-based

High conflict

Paid: By the products they sell you

A bank-branch or dealer advisor whose pay is tied to the funds and products you buy. Often “free” to you on paper.

The incentive is to sell, and to sell higher-fee products. Mutual funds with 2%+ MERs are common.

Fee-based (% of assets)

Medium conflict

Paid: By you (~1% of assets/year) — but may also earn commissions

You pay a percentage of the money they manage; they handle investments and some planning in an ongoing relationship.

The 1% compounds (≈$5,000/yr on $500k), and “fee-based” can still take product commissions. There’s an incentive to gather assets and discourage paying down the mortgage or buying an annuity.

Fee-only / advice-only

Low conflict

Paid: By you only — flat fee, hourly or retainer

You pay directly for advice or a plan. The planner sells no products and takes no commissions, so the advice is product-agnostic.

They usually don’t manage your money — you implement the plan (often DIY). And you write a visible cheque, which feels like more even when it’s less.

The “only” vs “based” trap

Fee-only means paid by you and no commissions. Fee-based means paid by you and possibly commissions. Advisors know the words sound the same — ask the direct question: “Do you receive any commissions or third-party payments at all?”

So which should you choose?

If you’ll implement a plan yourself, advice-only (fee-only) gives you the cleanest advice for a one-time cost. If you want someone to manage your money and you value the relationship, a fee-based advisor can be worth ~1% — provided you get real planning, not just a portfolio. Commission advice is the easiest to access and the easiest to overpay for; fine to start with, but check the fees and revisit as your savings grow. Compare all five routes on our find-an-advisor hub.

Frequently asked questions

What’s the difference between fee-only and fee-based?

They sound alike but aren’t. Fee-only (also called advice-only) means the planner is paid only by you and sells no products or commissions — the most conflict-free model. Fee-based means you pay a fee (usually a percentage of assets) but the advisor may also earn commissions from products. The one word — “only” vs “based” — changes whose interests can creep into the advice.

Is commission-based advice always bad?

Not always, but go in with eyes open. A commission/bank-branch advisor can help a beginner get started, and Canada banned some embedded commissions (deferred sales charges, and trailing commissions for DIY/discount accounts) in 2022. But the core conflict remains: the advisor is paid to sell products, and bank-branch funds often carry high fees. Always ask for the MER and whether a lower-cost option exists.

When is paying 1% to a fee-based advisor worth it?

When the value exceeds the cost — and 1% a year is a large, compounding cost. It can be worth it if the advisor delivers real planning (tax, retirement drawdown, estate), keeps you invested through downturns, and you have neither the time nor the temperament to DIY. It’s poor value if all you get is an off-the-shelf portfolio you could buy yourself for 0.2%. Ask what you get for the fee beyond fund selection.

How do I find a fee-only / advice-only planner?

Look for planners who advertise “advice-only” or “fee-only,” confirm they hold a CFP (or F.Pl. in Quebec), and ask in writing: “Do you receive any commissions, referral fees or third-party payments?” The answer should be no. See how to choose a planner for the full checklist.

How to choose a planner All 5 ways to get advice

Educational only, not financial advice. Fee ranges are typical market ranges and vary; regulatory details (Client Focused Reforms; Ontario title protection) are current as of June 2026 and differ by province. Always ask an advisor, in writing, how they are paid. See our methodology.