A fee-only planner is a Financial Planner/Advisor who charges a fee for their services related to financial and investment planning. Such a planner does not receive any commissions or other income from the products they recommend.

There are many small and large differences in the usage of these terms.  In this site, these terms are used almost interchangeably. The language used by SEBI includes 'Financial Planning' under 'Investment Advice'. We describe our advisory services to include both financial planning and investment advisory.

A fee-only advisor takes a fee from the client and provides advice. Since they earn nothing else based on the advice provided, they can be trusted to put the interest of their client above their personal interest. A fee-only planner acts in a 'Fiduciary' capacity. A fiduciary is a person who holds a legal or ethical relationship of trust with another person. In personal finance, a fiduciary advisor is some one who places the interests of her client above her own interests.

Most financial advice in India is given out by people who earn incentives, commissions, etc. from the investments that they recommend. These planners/advisors earn commissions from the products that they recommend. To the investor, their advice is seen as 'free of cost'.  A subset of them also charge fess to their clients. They are called 'fee-based'  planners.

We also hear another common term – Independent Financial Advisors (IFA). This term has a regulatory meaning in the United Kingdrom.  n India, it is loosely used to denote advisors who are not employees/partners of any firm. Many of the self-described IFAs deal with mutual funds.

SEBI is the authority regulating financial planners. They have defined 'Investment Advisers' as those who charge a fee for their advice and earn nothing from the investments that they recommend. People who meet the regulatory requirements and obtain a registration from SEBI can call themselves as Registered Investment Advisors (RIA).

The spirit of the regulations  discourage 'fee-based planners'.  The regulations also restrict 'free planners' to specific incidental activities. In the planned regulatory updates, SEBI has specified that only RIAs can use the word Advisor.

Mandatory certifications required by authorities like SEBI, and the additional employer-required certifications, typically ensure that individual advisors (whether employees/partners/independent) have a reasonable amount of knowledge and competence in the relevant areas. Lack of sufficient knowledge is seldom the reason for poor advice.  There is no evidence to show that fee-only planners are more knowledgeable.

As recently as Nov 2018, SEBI put out a list of do’s and dont’s for dealing with Investment AdvisersSome of them are included below.

1.Always deal with SEBI registered Investment Advisers.

2.Check for SEBI registration number. …

4.Pay only advisory fees to your Investment Adviser.   ….

11. Do not deal with unregistered entities.

12.Don’t fall for stock tips offered under the pretext of investment advice.

13.Do not give your money for investment to the Investment Adviser. …

If you have read this far, you are hopefully motivated to shun free, possibly-biased advice in favor of fee-only advice. Fee-Only India is an association of financial planners who do not sell any products or earn commissions, and work purely in the client's best interest. Please review the list and choose any one that you are comfortable with.

You can read these articles to get a start.

• What You Need To Know Before Hiring a Financial Advisor
• Curated List of Fee-Only Financial Planners in India
• List of questions that you can ask an advisor before selecting them

Our blog has an article that argues that 'free advice' may be expensive.