To become a fee-only advisor, you stop taking any pay tied to a product sale, and so do your firm and anyone related to it: no commissions, no trailing commissions, no 12b-1 fees, no insurance commissions or renewals. The practical steps are an investment adviser registration (the Series 65, or a waiver if you hold a current CFP or similar designation), a Form U5 ending your broker registration, a firm whose Form ADV reports only client-paid fees, and new fee agreements with your clients. Trails are the hardest part. The CFP Board lets you call yourself fee-only while they’re still arriving only if you try to transfer them, ask for them to stop, and give the rest to charity.
What “fee-only” means, three ways
There’s no single legal definition. Three standards matter, and the strictest one decides what you can say.
| Standard | Fee-only means | Trails |
|---|---|---|
| SEC Form ADV (the filing) | Item 5E shows only client-paid fees; nothing in Items 6A(1), 6A(2), 6A(6), 7A(1) or 7A(12) | Must be disclosed in your brochure while you receive them |
| CFP Board, Standard A.12 | You, your firm and related parties receive no sales-related compensation | Count as sales-related compensation, with one narrow route (below) |
| NAPFA membership | Paid solely by the client; neither you nor any related party receives pay contingent on a product sale | Same route as the CFP Board, capped at $2,500 a year |
The CFP Board’s definition of sales-related compensation is broad: “commissions, trailing commissions, 12b-1 fees, spreads, transaction fees, revenue sharing, referral or solicitor fees, or similar consideration.” When it wrote the standard, some commenters asked it to exclude insurance commissions, 12b-1 fees and trailing commissions, and it declined. NAPFA names “insurance rebates or renewals” and transaction-based wrap fees as arrangements that don’t meet its definition.
“Related party” is what catches most hybrid setups. Under the CFP Board’s standard there’s a presumption that it includes your family members and any business you or your firm controls, or that’s under common control with your firm. An insurance agency owned by your firm’s partners counts. A parent who is a broker at an unrelated firm doesn’t, according to the Board’s FAQ, as long as there’s no connection between the businesses.
For the exact Form ADV test we apply to firms, see what makes a firm fee-only by SEC data.
Step 1: decide where you’ll land
Join an existing fee-only RIA, which is faster and comes with a compliance program and custodian, or start your own. See starting an RIA for the registration, custodian and first-year costs, and starting an RIA with no clients if you aren’t bringing a book.
Step 2: get the adviser registration
To work as an investment adviser representative, NASAA’s model rule asks for one of two paths: the Series 65 within two years of applying, or the Series 66 plus the Series 7 within two years and the SIE within four. If you’re leaving the broker-dealer world, the Series 65 is the cleaner route, because the 66 depends on a live Series 7. The Series 65 has 130 scored questions in 180 minutes, you need 92 right to pass, and it costs $187.
You may not need the exam. Under the model rule, a current CFP, ChFC, CFA, PFS or CIMA in good standing waives the Series 65. NASAA updated that list in May 2024 and tells applicants to check that their state has adopted it, so confirm with your state securities regulator before you skip the exam.
Step 3: end your broker registration
When you leave the broker-dealer, it files a Form U5 ending your registration. You aren’t dual registered after that, which is what the fee-only test requires.
Your exam qualifications don’t vanish at once. Under FINRA Rule 1210, you have to requalify by exam if you’ve been unregistered for two years or more. FINRA’s Maintaining Qualifications Program extends that to “a maximum of five years” if you were registered in the category for at least a year before the U5 and enroll within two years of it. It costs $100 a year, plus continuing education due each year by December 31.
Keeping a qualification alive doesn’t make you registered. FINRA says plainly that maintaining a qualification “does not permit you to act as a registered person.” It’s a hedge in case you go back, not a way to keep selling. One catch: NASAA’s model rule says the program doesn’t extend a Series 65 or 66 for adviser registration.
Step 4: deal with trails
Trails are what keep many advisors from saying fee-only for years.
Securities trails usually stop. FINRA Rule 2040 bars a broker-dealer from paying commissions to someone who isn’t registered with one. Its exception for continuing commissions covers a “retiring registered representative” who “leaves the securities industry”, and the SEC staff letter behind it bars the retiree from being associated with an investment adviser during the agreement. Someone who becomes an investment adviser representative doesn’t fit. Expect the broker-dealer to reassign your accounts or stop paying you.
Insurance renewals can keep arriving after you leave, since many are paid by the insurance company rather than through a broker-dealer. Under both the CFP Board’s and NAPFA’s rules they’re still sales-related compensation.
The CFP Board route. Its FAQ, updated in June 2023, sets out the one circumstance in which you can describe yourself as fee-only while trails still arrive. You must have no other sales-related compensation, and you must:
- Request a transfer of the assets paying trails to a person or firm that isn’t a related party.
- Contact the companies paying trails on assets that can’t be transferred and ask them to stop.
- Donate any remaining trails to one or more 501(c)(3) organizations.
This replaced the Board’s 2018 view that the better approach was to wait until the trails stopped. There’s no dollar cap.
NAPFA’s stricter version. NAPFA applicants follow the same three steps, may receive no more than $2,500 a year in trails, must document that the full amount was donated, and must attest every year that they still donate it. Donating without the first two steps doesn’t qualify. NAPFA’s 2026 fiduciary standard is blunter still: “Do not accept commissions for the sale of any financial products.”
Disclose them while they last. As long as trails reach you, Form ADV Part 2A Item 5E requires your brochure to say that you accept compensation for selling investment products and explain the conflict, and Part 2B Item 4 names “trail” fees directly.
Step 5: decide what to do with your insurance license
Holding a license isn’t the problem. Being paid for a sale is. NAPFA’s FAQ says members “may hold an insurance license if it is disclosed in their ADV that they are not selling insurance, as some states require an insurance license to provide insurance advice to clients.”
At the firm level, the test is stricter. A firm that reports itself as an insurance broker or agent in Item 6A(6), or has a related insurance company or agency in Item 7A(12), fails, whatever its advisors do. If clients need a policy, refer them to an unaffiliated agent and take nothing for the referral.
Step 6: make the paperwork say fee-only
- Form ADV Part 1A, Item 5E: only fee boxes checked (assets under management, hourly, subscription, fixed or performance-based). Never “commissions”.
- Items 6A and 7A: no broker-dealer, registered representative or insurance broker or agent; no related broker-dealer or insurance company or agency.
- Part 2A and Form CRS: describe how you’re paid in the same words as your website.
- Your website: drop “fee-based”. To a client it means fees plus commissions.
Step 7: reprice your clients
Commission clients never saw a fee. Now they will, so set your price before the conversation. Among fee-only firms that publish prices, the median is $4,500 a year for ongoing planning, $2,000 for a one-time plan and $300 an hour, and 62% of firms that say how they charge use a percentage of assets (fee report). See how to price financial planning and flat fee vs AUM.
Explain the change in terms of the client: one fee they can see, no product they’re sold, advice you can give without a conflict. Expect some to stay with the broker-dealer. One advisor who left two broker-dealers to start an RIA put the hardest part this way: “there is a TON of head trash that comes along with leaving a broker-dealer” (thread). That’s one advisor’s experience.
Where Wellspent fits
Once your filings say fee-only, prospects and AI assistants can check it. A Wellspent record in the public graph at find.wellspent.co shows your fee-only status checked against SEC data, rechecked every four weeks, alongside your new fees, specialties and the clients you serve. Prospects write to you directly, with no lead fees and no share of client fees, the two costs a newly fee-only practice can least afford. Members also get a monthly report on who AI assistants recommend and quarterly press placement with media partners, for $89 a month. See how it works.