Commission, AUM, or Flat-Fee? A Huntsville Fiduciary’s Guide to the Cost of Financial Advice
By: Brian Seay, CFA
When searching for a financial advisor, the most confusing—and most important—question is often: "How do you get paid?"
The answer is the key to understanding whose interests the advisor truly serves. The financial industry is filled with complex fee structures that can be opaque, confusing, and, in some cases, create massive conflicts of interest. As a fee-only fiduciary financial advisor in Huntsville, AL, we believe you deserve total transparency.
Let's pull back the curtain and decode the three main ways financial advisors are paid, so you can make an informed decision for your family.
Before We Talk Fees: The Fiduciary Standard
Before you ask about how an advisor is paid, you must first ask, "Are you a fiduciary?"
A fiduciary is legally and ethically bound to act in your best interest, 100% of the time. You might be shocked to learn that not all financial advisors are. Many simply operate under a "suitability standard," meaning they only have to recommend products that are "suitable," not necessarily what is best for you.
At Capital Stewards, we are proud to be a fiduciary financial advisor in Huntsville for every client, in every interaction.
The 3 Main Payment Models for Financial Advice
Once you've confirmed an advisor is a fiduciary, it's time to understand their fee model.
1. The Commission-Based Model
How it works: The advisor is paid a commission by an insurance or investment company for selling you their specific product (e.g., a mutual fund, an annuity, or an insurance policy).
The Problem: This model creates a fundamental, unavoidable conflict of interest. Is the advisor recommending that annuity or mutual fund because it's the single best option for your retirement, or because it pays them the highest commission? You can never be 100% sure. This is the model we actively avoid.
2. The Assets Under Management (AUM) Model
How it works: This is the most common model for fee-only advisors. The advisor charges a percentage of the total assets they manage for you. For example, a 1% AUM fee on a $1 million portfolio is $10,000 per year.
The Problem: While AUM is far more transparent than commissions, it still has potential conflicts. What if the best financial advice for you is to pay off your $300,000 mortgage with money from your investment account? If your advisor does that, their fee just went down by $3,000 a year. This can disincentivize objective advice around real estate, paying off debt, or investing in your own business.
3. The Flat-Fee Model (Our Model)
How it works: This is the most straightforward and transparent model. The advisor charges a simple, flat annual or quarterly fee for comprehensive financial planning and investment management.
The Benefit: This model removes the conflicts of interest seen in both commission and AUM models. Our flat-fee financial planning services mean our advice is completely objective. Whether your portfolio is $1 million or $1.3 million, our fee is the same. Whether you should to pay off your mortgage, buy a rental property in Madison, or maximize your 401(k) at your engineering job in Cummings Research Park, our compensation doesn't change.
Our Path: Why We Are a Flat-Fee, Fee-Only Advisor
At Capital Stewards, we are a fee-only firm. This means we never accept commissions, kickbacks, or any third-party payments. Our only source of revenue is from our clients.
We've chosen the flat-fee structure because it aligns perfectly with our core value of Stewardship. We believe in providing honest, transparent, and wise counsel. Our flat-fee model ensures our focus is always on your best interest, allowing us to provide comprehensive planning that covers your entire financial life—from taxes and insurance to investments and estate planning—all for one clear, predictable price.
Who is a Flat-Fee Advisor For?
Our flat-fee financial planning model could be ideal for:
Huntsville tech and engineering professionals with complex compensation (like RSUs or stock options) who need advice beyond just investment management.
Government contractors and Redstone Arsenal employees who have high incomes and want to maximize their retirement savings and tax strategies.
Families and individuals who want a trusted, fiduciary partner to guide their long-term financial decisions with clarity and integrity.
You deserve a financial plan built on transparency and trust. If you're ready for a new, objective approach to wealth management, start a conversation with the Capital Stewards today.