There are three main types of compensation received by financial advisors, brokers, financial planners and the like. The most lucrative by far is the commission based compensation scheme. Stockbrokers, insurance salesman, and some financial advisors and planners receive a commission when they sell you a product.
Fee-based compensation is a mix of fee for service and commission based. Some financial planners and advisors run a fee-based model, which allows them to charge a set fee for services while also receiving commissions for selling you a product or for referring you to someone who wants to sell you a product.
Fee-only advisors work for you rather than selling products to you. Fee-only financial advisors are still less common than the other two types of financial service providers, likely because they aren't compensated quite so handsomely. A major distinction between a fee-only provider and the other two types is that the fee-only provider is paid only by you, the client.
