According to Houston Financial Advisors Richard J. Alphonso J.D., CPA, M.S.T. and Marcel J. Hebert, CFA, CFP, a financial advisor's compensation method should be clear and unambiguous. Prevalent fee-methods include:

Commission-only.

The advisor is paid from the sale of financial products such as mutual funds and annuities.

Commission and fee.

The advisor is paid for financial product sales; additional fees are shared for services like financial planning.

Fee-offset (or fee-based).

The advisor may use a combination of commissions and fees, and in certain circumstances will "offset" one against another.

Fee-only.

The advisor is paid a fee directly from the client and receives no additional remuneration from third parties (for product sales, etc.). Depending on the advisor, a fee-only engagement can include hourly fees or a flat-fee for consulting, and asset-based percentage fees for investment management.