A firm is fee-only by SEC data when its Form ADV and its advisors’ registrations show no way to be paid except by clients. Our test has five parts: the firm reports no commissions in Item 5E of Form ADV; it isn’t a broker-dealer, a broker’s registered representative or an insurance broker or agent (Item 6A); it has no related broker-dealer or insurance company or agency (Item 7A); and none of its advisors holds an active broker registration. For firms we add straight from SEC filings, we also read the firm’s own website for commission or broker-dealer language. In the public graph, 24,501 advisors are presented as fee-only today.
Why the label isn’t enough
“Fee-only” isn’t a title the SEC defines or grants. A firm can say it on its website while an affiliated insurance agency pays its advisors, or while those advisors are also registered with a broker-dealer. “Fiduciary” doesn’t settle it either: every registered investment adviser owes a fiduciary duty, including firms whose people also earn commissions.
The filings settle it, because they’re specific, public and signed by the firm, and the answers are in the SEC’s database for anyone to read. Clients check them more often than advisors expect: in our study of 600 AI answers, 40% told the reader to look the advisor up on the SEC’s adviser database before hiring.
The test, item by item
| Where | What we check | Fee-only answer |
|---|---|---|
| Form ADV Part 1A, Item 5E | How the firm is paid | ”Commissions” not checked |
| Item 6A(1) and 6A(2) | Is the firm also a broker-dealer, or a registered representative of one? | Neither checked |
| Item 6A(6) | Is the firm also an insurance broker or agent? | Not checked |
| Item 7A(1) and 7A(12) | Does the firm have a related broker-dealer, or a related insurance company or agency? | Neither checked |
| The advisor’s registration | Does the person hold an active broker (agent) registration? | No |
Item 5E: how the firm is paid
Item 5E lists the ways a firm can be compensated for advisory services: a percentage of assets under management, hourly charges, subscription fees, fixed fees, commissions, performance-based fees and other. Every one except commissions is paid by the client. If “commissions” is checked, the firm isn’t fee-only, whatever its website says.
Item 6A: the firm’s other businesses
Item 6A asks what else the firm itself does. Three answers fail the test: the firm is a broker-dealer (6A(1)), it’s a registered representative of a broker-dealer (6A(2)), or it’s an insurance broker or agent (6A(6)). Each is a way to earn money from a product sale rather than from a client’s fee.
Item 7A: related companies
Item 7A asks about related persons: businesses tied to the firm by control, such as a parent company, a subsidiary or a sister company under the same ownership. A related broker-dealer (7A(1)) or a related insurance company or agency (7A(12)) fails the test. This is the check that catches the common arrangement where the advisory firm reports no commissions but its owners’ insurance agency down the hall earns them on the same clients.
NAPFA’s standard names “insurance rebates or renewals” among the arrangements that don’t meet its fee-only definition, and the CFP Board counts insurance commissions as sales-related compensation. We rule them out too. That’s why 6A(6) and 7A(12) are in the test and not just the commissions box.
The advisor’s registration
The firm’s answers cover the firm. Each person has their own record. An advisor who holds an active broker registration alongside their investment adviser registration is dually registered and can earn commissions through a broker-dealer, so they fail the test even if their advisory firm passes. We also require that the person is approved as an investment adviser representative in at least one state and currently works at a firm that passes.
How we apply it
The test is the same everywhere, but records reach the public graph in two ways, and the order of checks differs slightly.
Records from fee-only directories. Most records start from professional organizations that admit only fee-only advisors, such as NAPFA, XY Planning Network and the Advice-Only Network. Their own membership rules already exclude commissions. We then link each advisor to their SEC record, only when the name matches and they currently work at the firm the listing names (never on a name alone). If that record shows an active broker registration, or the firm’s Form ADV reports commissions, the record stops being presented as fee-only and drops out of every list and match. In Canada, where Form ADV doesn’t apply, we do the same for advisors affiliated with an investment or mutual fund dealer.
Records built from SEC filings. We also add fee-only advisors at small firms straight from the SEC’s published Form ADV feeds. For these, the firm must pass every item in the table above, must report that it offers financial planning (Item 5G) and must serve individual clients (Item 5D). Then we read the firm’s website. A firm is left out if its site says the firm or its advisors currently earn commissions or sell commission products, names a broker-dealer it works through (a custodian such as Schwab or Fidelity doesn’t count), or calls the firm fee-based without ever saying fee-only. A flag counts only if its supporting sentence appears word for word on the site, and past jobs or statements that the firm doesn’t do something are ignored.
Members. When an advisor joins, we check their CRD number against the SEC’s records, and we recheck every four weeks. The record shows as fee-only only when the person is registered as an investment adviser representative, holds no broker registration, and every advisory firm they work for reports no commissions. Missing data counts as unknown, never as a pass. A broker registration or a commissions answer removes the fee-only label and takes the record out of matches.
What the filings can’t see
The test is strict, but filings are a snapshot, and some things don’t appear in Part 1A:
- An individual’s outside work. An advisor who earns insurance commissions through an unrelated agency may show it in their own registration record and in the brochure supplement (Form ADV Part 2B), not in the firm’s Item 6A or 7A. Directory standards and our website check are what catch most of these.
- Changes between filings. A firm must file an annual updating amendment within 90 days of its fiscal year-end. A new affiliation can exist before it’s filed.
- What the brochure says. Part 2A Item 5E requires a firm to disclose it if “you or any of your supervised persons accepts compensation for the sale of securities or other investment products”, and Part 2B Item 4 names “trail” fees from mutual funds. We read Part 1A, not every brochure. A prospect who reads yours will see it.
The CFP Board’s standard reaches further than the filings in one way: a CFP professional may describe their compensation as fee-only only if they and their related parties receive no sales-related compensation, which includes trailing commissions. See how to become a fee-only advisor for what that means when you’re leaving commissions behind.
Check your own firm in ten minutes
- Search your firm on adviserinfo.sec.gov and open Form ADV Part 1A.
- Item 5E: confirm “commissions” is unchecked. If it’s checked for business you no longer do, file an amendment.
- Item 6A: confirm broker-dealer, registered representative and insurance broker or agent are unchecked.
- Item 7A: confirm no related broker-dealer and no related insurance company or agency.
- Each advisor: search them by name and confirm there’s no current broker registration.
- Your website: if it says “fee-based”, change it. To a client, fee-based means fees plus commissions, and our website check flags it.
- Make your website, your Form ADV Part 2A and every outside record describe your fees the same way. See what prospects check before they book.
If your record in the public graph shows the wrong status, any advisor, member or not, can email [email protected], and we respond within seven days. The full rules are on our methodology page.
Where Wellspent fits
The fee-only check is the reason a Wellspent record carries weight: no advisor whose SEC record shows commissions or a broker registration is presented as fee-only in the public graph at find.wellspent.co, and each record shows its sources so search engines, AI assistants and clients can tell a claim from a checked fact. Members’ registrations are rechecked every four weeks. Membership adds introductions straight to your inbox with no lead fees and no share of client fees, a monthly report on who AI assistants recommend, and quarterly press placement with media partners, for $89 a month. See how it works.