Fee-Only vs. Fee-Based Brokers

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Since 1999 our law firm has recovered more than $350,000,000 for victims of investment fraud and misconduct.
  • Jury Verdict Won Against Prudential Securities $262 Million
  • Recovered for 100-Year Old Widow $30 Million
  • Recovered in Retirement Losses $10 Million
  • Recovered for a Large Group of Individual Investors $6.5 Million
  • Recovered for Elderly Victim in Ponzi Scheme Case $3.8 Million
  • Recovered for Elderly Ponzi Scheme Victim $3.2 Million
  • Recovered for More Than 50 Families of Ponzi Scheme in California $3.2 Million
  • Recovered for 35 Families in Northeast Ohio $3.1 Million
  • Losses Recovered for 20 Retirees $3 Million
  • Recovered for Retired Physician Against Major Wall Street Firm Prior to Filing FINRA Arbitration $2.5 Million

The Importance of Knowing How Brokers Earn Their Money

Brokers and financial advisors make money in a number of ways, including:

  • Salary and commissions paid by their firms
  • Hourly or flat-rate fees for their services
  • Third party commissions
  • Or a combination of these sources

Unfortunately, some financial professionals may try to pressure investors into new investments that generate a commission for them (the broker) even when those investments aren’t the best fit for the client. Other fraudsters may try to hide outrageous fees by burying the fee structure in the fine print, or just failing to mention it.

Fee-Only Investment Accounts

The financial industry has been moving toward a fee-only model in recent years. Fee-only accounts are managed by financial advisors that do not accept any fees or commissions based solely on their product sale. These accounts primarily charge a percentage of assets under management, but could also include other methods of charging clients, such as:

  • Flat retainer
  • Hourly rate
  • Charge specific to the task at hand

Fee-only advisors have fewer inherent conflicts of interest and they generally provide more comprehensive advice.

Fee-Based Brokers

Commission-based brokers often take offense at this distinction. Blurring the difference, they created the category “fee based,” which means they charge a fee in addition to collecting commissions. Study after study shows that even consumers seeking a strictly fee-only advisor find these terms confusing, and can be easily misled.

A fee-only account may not be a right path for everyone. If you’re going to trade only five to seven times per year, it’s probably more economical for you to pay commission, as opposed to paying somebody a percentage of your assets under management.

The Takeaway

The takeaway is that it’s important to know how your broker is getting paid in order to ensure that the fee structure is the best fit for you. You can keep yourself informed by asking your broker directly about fees and commissions, carefully reading through your brokerage agreement, and reviewing your account statements and other documents to monitor fees and commissions.

The Meyer Wilson Way

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  • More than $350,000,000 Recovered
  • Voted Best Lawyers in America┬« for over Ten Years Running
  • David Meyer is President of Public Investors Advocate Bar Association (PIABA)
  • Over a Thousand Investor Claim Cases Since 1999
  • Exclusive Focus on Investor Claims & Class/Mass Action Lawsuits
  • Deep Bench of Skilled Attorneys and Staff Members

TRUSTED BY OVER 1,000 INVESTORS

Meyer Wilson has represented over 1,000 individual investors in high-stakes claims across the country, and has recovered over $350 million on their behalves. See what former clients have to say about our team.

  • “I primarily worked with Courtney Werning throughout the process and she was informative and knowledgeable. I trusted and fully recommend Courtney and her team.”

    - S.R.
  • “The communication throughout the process was on par - and they took the time to indulge me with the various questions and opinions.”

    - R.G.
  • “What I truly appreciated was getting a great result for my Mom with limited involvement/stress on her.”

    - S.W.
  • “We went to arbitration with the other respondent and I got to see firsthand the level of professionalism and expertise the Meyer Wilson firm can deliver.”

    - D.V.
  • “Chad would take the time to call and talk with me. His explanations were always clear and concise. I also appreciate all the effort put into the details and statistics required to argue this case.”

    - P.N.
  • “Meyer Wilson was able to produce the results that we felt were obvious and warranted while several other firms and even state offices simply had trouble understanding let alone moving the case forward.”

    - B.K.
  • “My overall experience was positive and I would encourage anyone who even thinks they have been a victim of stockbroker misconduct to call David.”

    - S.T.
  • “Meyer Wilson represented me in a suit brought last year against my brokerage firm, securing a very fair and equitable settlement for me.”

    - R.G., M.D.
  • “Right from the start, you had the passion and desire to win this case for us. I have never worked with an attorney or firm as compassionate as yours. I would highly recommend your firm to anyone.”

    - G.A.

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