Financial advisors are generally split into two categories: fee-only versus fee-based. A fee-only advisor is compensated only through the fees their clients pay, whether that’s an hourly rate, a flat fee or a percentage of assets under management. In other words, their compensation isn’t tied in any way to commissions. Fee-based advisors, on the other hand, earn a mix of fees paid by their clients as well as commissions. Fee-based advisors have an incentive to sell you financial products since it boosts their own income, which creates potential conflicts of interest. Because of this, fee-only advisors are usually preferable.