Introduction

The financial services industry is full of titles, designations, and confusing terminology. “Financial advisor,” “wealth manager,” “planner,” “broker”—they often sound the same on the surface. But behind the scenes, the way an advisor is compensated and regulated can dramatically shape the advice they give.

If you’ve ever wondered what makes a fee-only RIA different from a dually registered advisor, this article breaks it down in simple, client-focused terms.

Fee-Only vs. Dually Registered: Why It Matters

Most people are surprised to learn that not all financial professionals are required to act in a client’s best interest. And even fewer understand that some advisors switch between different legal roles—with different standards of care—depending on the service they’re providing.

As a fee-only Registered Investment Adviser (RIA), our firm operates under one simple principle:

“We are fiduciaries 100% of the time—never part-time, never situationally.”

Dually registered firms operate differently, and understanding the distinction helps clients make more informed, empowered decisions about whom they trust.

What Does “Fee-Only” Mean?

A fee-only RIA is compensated exclusively by the client. No commissions, no product sales, no third-party incentives. That means all revenue comes directly from the people we serve—not from investment companies, insurers, or product sponsors.

Benefits of Fee-Only:
- True fiduciary duty at all times
- No commissions or product sales
- No revenue sharing or 12b-1 fees
- No competing incentives
- Advice aligned solely with the client’s best interest

This structure eliminates the most common conflicts found in the financial industry.

What Is a Dually Registered Advisor?

A dually registered advisor is affiliated with both:
1. A Registered Investment Adviser (RIA) – where fiduciary duty applies, and
2. A broker-dealer – where the fiduciary duty does not apply

In practice, this means they switch roles depending on the situation. When giving ongoing advice, they may be acting as a fiduciary. But when selling certain products or executing transactions, they may be acting as a broker—operating under a different, less stringent standard.

The result: Clients often have no idea which “hat” the advisor is wearing at any moment.

This dual role creates inherent confusion and conflicts of interest.

Core Differences at a Glance

Fee-Only RIA vs. Dually Registered Advisor:
- Fiduciary Duty: Always vs Sometimes
- Compensation: Clients only vs Clients + commissions
- Product Sales: None vs Often present
- Conflicts of Interest: Minimized vs Disclosed but still exist
- Incentives: Fully aligned vs May conflict with client interests
- Transparency: High vs Varies

A fee-only structure is simple and easy to understand. Dual registration requires constant role switching, disclosures, and complexity.

Why Fiduciary Duty Alone Isn’t Enough

Many advisors—regardless of registration—claim to “act in your best interest.” It sounds reassuring, but clients deserve more than a slogan.

Fiduciary duty is not a tagline; it’s a discipline that must be reinforced by the business model itself.

A dually registered advisor can:
- Act as a fiduciary one moment, and
- Switch into a non-fiduciary brokerage role the next

Even with disclosures, this creates confusion about when the client is receiving advice versus when they’re being sold a product.

A fee-only RIA eliminates this ambiguity entirely:
One role. One standard. One obligation. Always acting in your best interest.

The Problem With Commission-Based Incentives

Commissions don’t automatically make someone dishonest—but they do create natural economic incentives that can influence recommendations.

These include:
- Higher-commission investment products
- Annuities with upfront payouts
- Mutual funds with 12b-1 fees
- Proprietary investment products
- Revenue-sharing agreements

Even if disclosed, these conflicts can influence advice. That’s why the fee-only model avoids them altogether.

Why Clients Prefer Fee-Only Advisors

Independent studies show that clients increasingly prefer advisors who:
- Are compensated only by clients
- Have transparent fee structures
- Avoid commissions
- Provide advice without sales influence
- Serve as fiduciaries at all times

Clients want clarity and trust—not complexity or hidden incentives.

A Simple Message for Clients

If you want to choose an advisor with the fewest conflicts and the clearest commitment to your best interest, fee-only fiduciary RIAs stand out.

“We do not sell financial products.
We do not earn commissions.
We do not switch hats.
We sit on your side of the table—100% of the time.”

Final Thoughts: Transparency Is Power

The financial industry is full of noise. Many advisors sound alike, use similar titles, and make similar promises. But compensation and incentives tell the real story.

Fee-only fiduciary RIAs offer:
- Uncomplicated relationships
- Clear alignment of interests
- Evidence-based advice
- No commissions, ever
- A commitment to fiduciary duty every single moment

When the business model supports the ethics, the client benefits.

 

Mike

 

Mike Mickels is the President and Chief Compliance Officer of CochranMickels Retirement Specialists, LLC, and an avid sporting clay competitor. Our firm provides personalized planning and investment services to individuals approaching and in retirement. Disclaimer: This content is intended solely for informational purposes. CochranMickels Retirement Specialists, LLC and its representatives are only authorized to offer advisory services where properly licensed or exempt from licensure. Investing carries risks, including potential loss of principal capital. Our firm does not endorse external links, nor is it responsible for third-party content