I  have never believed a person who gets paid a commission or an asset fee is more or less ethical than a person who gets paid a fee for their advice.  

People are ethical or unethical, not compensation methods. Yet, there is a simple elegance about the flat-fee-for advice financial advisor. It's totally transparent. There is never any question about how you're being paid or whether there is a potential conflict of interest. 

It's very easy for the client to understand. It makes the "product" the advice rather than the product being a financial plan, investments, insurance, annuities, tax returns and/or legal documents. Whether you like it or not, there can be a perception that if you get paid by a product or service provider you may be influenced by higher compensation or better perks. 

Consumers and the regulators naturally ask questions like, "Was that the best product for the client or was that product recommended because it paid a higher commission or a bonus or qualified the seller for the trip to Hawaii?"

It's possible for a client or prospective clients' perception of your trustworthiness to be different than your actual trustworthiness. And this perception could be influenced by how you choose to be paid.

This article explores three things:

The trends that I see that are leading to a flat fee for advice financial services world. I believe this is inevitable and may happen rapidly and soon.

Why it matters to you.

How you can capitalize on this opportunity. (You can hear more from Bill Bachrach on flat fees during an upcoming Webinar.)

As a reminder, fee-based and fee-only are different. Fee-based is usually a percentage of assets or net worth, which may adjust or offset the fees if commissions are also involved. Fee-only is an hourly rate or a flat dollar amount, usually an annual number that is paid monthly or quarterly and deducted automatically from a bank or money market account. The premise of the fee-only model is that the advisor is being paid for their advice and receives no compensation from any other product or service provider. If you choose to be fee-only I recommend the flat annual rate over hourly.

Consider the term "new normal" as a way to understand the trends that will make the flat-fee-for-advice model ubiquitous, possibly very rapidly and much sooner than you might think possible. I believe this term "new normal" has become popular because of how rapidly something can change, leaving what used to be normal forever in the dust. Here are a few examples:

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