I promised a more objective way of choosing a financial planner in my recent blog on how advisors dress. How they charge is a good place to start. Not only will it tell you the cost of the service, but it will give you a good idea who you’re dealing with.

Liz Frazier Peck is a fee-only CFP® who contributed this article to Forbes. She starts out by making an important point. Pretty much anybody can call themselves a financial advisor so you need to look beyond that term. How they are paid can be telling.

“Commission-based:  Commission-based advisors (brokers, insurance agents, registered representatives) sell financial products such as mutual funds, annuities and insurance and receive commissions on those products. They are often employed by large financial institutions and have their Series 6 or Series 7. Because part (or in some cases all) of what they are paid is based on what they sell, there is a major conflict of interest. It’s important to be aware that the temptation of commission is there and it can influence their recommendations.

“Fee-based: These advisors are relatively new to the financial world. Fee-based advisors are typically affiliated with a broker/agent and like the commission-based advisors, generally hold a license to sell investments or insurance for a commission. Fee-based advising is confusing because like the fee-only advisor, the fee-based advisor provides financial planning for a fee. However, the important difference is they also sell products and get paid commissions. So there is still that major conflict of interest, because their fee-based recommendations could (and often do) include purchasing products they receive commissions on.

“Fee-only: This is the only type of advisor [we] recommend for comprehensive financial planning and/or asset management. Fee-only advisors have a fiduciary duty to act in the best interest of their clients. They only make money through flat fees, hourly rates or a % of the assets they manage. They don’t receive commissions or fees based on product sales, and usually provide more comprehensive advice including estate, retirement, investing, taxes, education funding and insurance planning.”

How a financial advisor charges is a matter of public record and can be found in the Part 2 Brochure section of their Form ADV which is on file at the Investment Adviser Public Disclosure (IAPD) website. Check out someone you know!

Note: The terms “financial planner” and “financial advisor” are often used interchangeably; however, “financial planner” suggests someone who looks beyond asset management to provide comprehensive planning which aligns all aspects of your financial life with your life goals and requires a broader level of expertise and involvement with the client.