Ron Olsthoorn Explains Difference between "Fee-Only" and "Fee-Based" Financial Planning

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The financial planning field is full of nuances that the general public may find difficult to navigate. Ron Olsthoorn, financial planning expert, explains the differences between fee-only and fee-based financial planning.

Forbes has recently run an article detailing the differences between "fee-only" and "fee-based" financial planning practices, which, despite their similar names, are extremely dissimilar. Ron Olsthoorn, a financial professional, explains how these practices diverge from one another and how they are similar.

According to the article, "Fee-only financial planners are registered investment advisors with a fiduciary responsibility to act in their clients' best interest." These professionals are legally required to do what is best for their clients. As such, they are not able to collect money based on the sales of products. With that conflict of interest out of the way, these professionals, generally, offer more fully-developed advice to their clients.

In the United States, fee-only professionals are unofficially governed by the National Association of Personal Financial Advisors, or NAPFA. The premier professional association for these professionals, this organization is a rather prestigious leader in the field.

Commission-based agents, on the other hand, charge on a "fee-based" payment structure. The article explains that these professionals both charge a fee and collect commissions. Given the close nature of these two terms (fee-based and fee-only), consumers reportedly often become confused between the different services to which they refer.

"Understanding these subtle nuances between the services that financial planner’s offer is important when shopping around for financial guidance," commented Ron Olsthoorn. "Getting the right kind of financial guidance means more than simply hiring a professional with experience and a good education; when looking for a financial planner, consumers need to think about not only what services these professionals provide, but how they provide them."

When it comes to deciding between fee-only and fee-based services, Ron Olsthoorn believes that the best route a consumer can take is to become educated about their options. The aforementioned article seems to agree with this statement, although it is certainly biased in favor of fee-only financial planning.

"NAPFA members are often annoyingly fanatical proponents of the fee-only model. I'm no exception," writes the author of the article. "I would rather see consumers handling their finances on their own than wondering if the products they have been sold are really the best option to meet their goals."

Ron Olsthoorn encourages consumers to do a bit of research before signing on with a financial planner: "Start on the Internet and learn about the different options that are available to you. Ask your friends and family if they have any recommendations, if they know of any professionals who are great at their job. From there, compare services until you are certain you have found the right professional for your financial needs."


Ron Olsthoorn is an insurance and investment professional who has completed the Certified Financial Planning Course (CFP). Through his experience, Ron Olsthoorn has developed a great deal of insight into the inner workings of the financial planning industry, allowing him to guide individuals while maintaining compliance with all federal and industry regulations.

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