What is a fee only investment advisor?
A fee only investment advisor puts their clients' interests above their own. They have a fiduciary responsibility to act in their clients' best interests. The fee only advisor works for and provides advice to their clients. They work with the client and make recommendations that fit the clients’ goals. These are unbiased recommendations and not tied to particular products or investments.
The fee only advisor's compensation is based on the service(s) they provide their clients. It is usually based on the assets under management, on an hourly basis or as an annual contingency fee. They are not compensated for products sold. Because of this they tend to recommend investments that have lower costs associated with them, for example no-load mutual funds, low expense exchange traded funds, etc.
When interviewing a potential advisor you should never hesitate to ask how they are compensated. This a critical piece of information in making a decision as to who you may or may not work with.