#advisor selection

[investingguidebook]

Five Resources Heirs Can Read About Stepped-Up Basis Before Their First Advisor Meeting

An heir preparing for a first meeting with a tax advisor about an inherited brokerage account is often hungry for a quick primer on the rules. The rules sound simple ("the basis steps up to the date-of-death value") but the implementation has layers, exceptions, and interactions that take a few hours of reading to understand even at a high level. The advisor will fill in the gaps in the meeting; reading the basics in advance changes the quality of the conversation.

Below is a curated list of five resources, all free, all from independent or government sources, that cover the stepped-up basis rule and the surrounding inheritance tax landscape in plain language. The list is annotated for what each resource covers and why it is worth reading first. The piece itself is educational and does not provide tax, legal, accounting, or financial advice.

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1. IRS Publication 551, Basis of Assets

The single most authoritative source on the federal rules for the basis of inherited property is IRS Publication 551. It is written for taxpayers (not for professionals), it is updated annually, and it covers the basis rules across multiple acquisition scenarios including purchase, gift, and inheritance.

For heirs, the relevant chapter is the section on property received from a decedent. It covers the general date-of-death rule, the alternate valuation date election, special rules for property used in farming or other specified purposes, and the holding period treatment for inherited property. The publication is short enough to read in an evening, and it is the document the IRS itself uses to explain the rules to the public.

The companion publication, IRS Publication 559 on survivors, executors, and administrators, is the federal reference for the broader tax situation following a death. It covers what tax returns need to be filed, who is responsible for filing them, and what documentation needs to be retained.

2. The Investor.gov primer on inherited accounts

The SEC's investor.gov consumer information site is written for individual investors rather than for tax professionals. Its coverage of inherited accounts is less detailed than the IRS publications, but it is also much more accessible. The site explains what a brokerage account is, what an inherited account is, what a transfer-on-death registration is, and how the basic process of inheriting a brokerage account typically unfolds.

For an heir who is unfamiliar with brokerage account mechanics in general, the investor.gov material is a useful starting point before any of the tax-specific reading. It also covers the broader topic of how to evaluate a financial advisor, which is relevant for heirs who are choosing one for the first time.

3. The FINRA consumer information on inherited accounts

FINRA is the self-regulatory organization for broker-dealers, and it publishes consumer-facing information on how brokerage firms are supposed to handle inherited accounts. The material covers what the heir can expect from the brokerage in terms of process, what documentation is typically required, and what the timeline of the account transfer typically looks like.

For an heir trying to understand whether the brokerage is handling the inheritance correctly, the FINRA material is a useful benchmark. It is not legal advice, but it is the source that most brokerage compliance teams use to set their own expectations.

The companion site, FINRA BrokerCheck, lets the heir verify the registration and disciplinary history of any broker or brokerage firm. For heirs who are considering whether to keep their inherited assets at the current brokerage or move them, BrokerCheck is a useful research tool.

4. The AICPA's tax practice resources

The American Institute of CPAs publishes professional standards and guidance for tax practitioners, much of which is publicly available. The general resources at the AICPA cover how a CPA approaches an inheritance tax engagement, what the heir can expect from the relationship, and what the professional standards of care look like.

For an heir preparing to evaluate one or more potential tax advisors, the AICPA material is useful background. It is not advice in itself, but it explains what a qualified tax advisor is required to do under their professional standards. The framing helps the heir distinguish a thorough advisor from a less thorough one.

5. The Wikipedia entry on cost basis

The Wikipedia entry on cost basis is a plain-language summary of the broader concept of basis in tax and investment contexts. It covers how basis is established, how it is adjusted over time, and how the basis step-up rule fits into the broader framework.

For heirs who have not previously had to think about basis at all, the Wikipedia entry is a useful conceptual primer. It is general and not specific to any particular jurisdiction's rules, but the concepts it covers are the ones the IRS publications take for granted. Reading the Wikipedia entry first makes the IRS publications easier to follow.

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A practical reading order

For an heir who has roughly an evening of reading time before the first advisor meeting, the order that works well is:

The Wikipedia entry on cost basis, to establish the general concept.

The investor.gov material on inherited accounts, to establish the brokerage-process context.

The relevant chapter of IRS Publication 551 on property received from a decedent, to establish the federal tax framework.

Skim the FINRA consumer material on inherited accounts and the AICPA resources, mostly to understand what to expect from the brokerage and from the advisor.

This sequence is about three hours of reading for someone unfamiliar with the topic, and an hour for someone who has at least passing exposure to investment accounts. The longer educational overview at Capivise's educational overview on inherited brokerage accounts is a useful complement that pulls the threads together with the questions to ask an advisor.

What this reading does and does not do

This list is educational. It points heirs to free, independent, or government-source reading on the stepped-up basis rule and the broader inheritance tax framework. It does not provide tax, legal, accounting, or financial advice. Every situation depends on facts an appropriately licensed professional needs to verify for the specific facts.

For heirs who do not yet have an advisor identified, the platform-based matching service at Capivise is one example of how independent fiduciary advisors are typically matched with individuals dealing with inheritance and windfall situations.

The short version

Five free, independent resources cover the stepped-up basis rule and the surrounding inheritance landscape well enough to prepare for a first advisor meeting: IRS Publication 551, the investor.gov primer on inherited accounts, the FINRA consumer information on inherited accounts, the AICPA professional standards materials, and the Wikipedia entry on cost basis. An evening of reading in a sensible order changes the quality of the conversation with the advisor in measurable ways. The advisor's time is not wasted on terminology, and the heir leaves the meeting with the right answers to the right questions.

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What a Strong Advisor Continuity Plan Looks Like

When a financial advisor relationship is expected to last for decades, the continuity arrangements behind that relationship matter as much as the advisor's individual credentials. Most clients never see the continuity plan that governs their account, and many firms treat it as an internal document rather than something to share during engagement. This piece walks through what the document typically includes when a firm has engaged with the topic in depth, framed as an educational guide for clients who want to know what good looks like.

This is informational only and is not investment, legal, or tax advice. The specific situation of any client belongs in a conversation with their advisor, the firm, and their own counsel.

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The Component Parts of a Continuity Plan

A continuity plan is the document that describes what happens at the firm when normal operations are disrupted. The disruptions can be operational (a building issue, a regional emergency), institutional (a key person becomes unavailable), or strategic (the firm is acquired or its ownership changes).

A strong plan addresses each of these scenarios with specific arrangements rather than general statements. The depth of the plan is one of the most useful signals about how seriously the firm takes the question.

What a Strong Plan Typically Includes

Across the better continuity plans in the advisory industry, several elements appear consistently:

A specifically named successor advisor for each client account, with the successor's contact information and credentials documented. Not "another advisor at the firm" but "Specific Person, with these credentials, contactable at this address."

A documented protocol for client notification when continuity arrangements activate. The protocol specifies the channels used (email, mail, phone), the timeline (within a specific number of business days), and the information the client can expect.

A documented arrangement for records and documentation. This includes where records are stored, who has access during normal operations, who would gain access during a continuity event, and the retention policy for the records.

A documented process for clients who do not want to continue under the new arrangement. This typically includes a transition period during which the client can move to a different firm without penalty.

A periodic review schedule for the plan itself. Plans that are updated only when a regulator requires it are weaker than plans with their own internal review cycle.

The SEC investor education resources cover what continuity disclosure clients should expect to find in advisor documents. Form ADV Part 2 is the most common place this disclosure lives.

The Acquisition Provision

A separate provision worth looking for is the acquisition scenario. Many continuity plans focus on key-person scenarios (a primary advisor becoming unavailable) and operational scenarios (a building issue) without addressing what happens if the firm itself is sold to a larger institution.

A strong acquisition provision typically includes:

The firm's general posture on acquisition (open, closed, conditional). A timeline for client notification if an acquisition is being considered or has been agreed to. An opt-out process for clients who do not want to continue under the new ownership. A description of how client records and the existing continuity arrangements would transfer.

For some firms, the acquisition question is uncomfortable. The firm may not have a clear posture, and the conversation can feel speculative. The honest answer "we are not actively exploring acquisition but cannot guarantee it will never happen" is a reasonable position. The unsatisfying answer is one that deflects the question entirely.

The Documentation Standard

The strength of the continuity plan depends on the strength of the underlying documentation. A plan that promises continuity but does not specify what documents would survive a primary advisor's departure is making a promise it may not be able to keep.

A useful documentation standard typically includes:

A current financial plan document, updated within the last year, that captures the client's goals, situation, and constraints. A current investment policy statement that specifies the parameters of the investment relationship. Records of major decisions made during the relationship, with the rationale documented. Records of communication with the client, including the topics covered in periodic reviews.

A client who has copies of these documents themselves is in a substantially stronger continuity position than a client who relies on the advisor's institutional memory. The AICPA personal financial planning resources cover the kinds of records typically maintained as part of a coordinated planning relationship.

The Team Knowledge Standard

For team practices, the continuity plan should describe how team members come to have working knowledge of each client account. A team that meets weekly to review accounts has a different continuity profile than one where each account is owned by a single advisor with the team available only for backup.

Topics that strong team plans address:

The cadence of team account reviews. The depth of each team member's working knowledge of each client account. The process for onboarding a new team member to the existing client roster. The handling of routine absences (vacation, illness) where coverage is provided by a team member.

A useful question during engagement is to ask which team members the client could call directly if the primary advisor is unavailable for a routine question. The specific names matter. "Anyone on the team" is a weaker answer than "Specific names, who you have met during onboarding."

What Weak Plans Look Like

For contrast, a weak continuity plan is usually identifiable by what it does not say. Common indicators:

The plan describes operational continuity (building issues, regional emergencies) but does not address key-person scenarios specifically. The plan refers to "the team" without naming individual members or specifying their roles. The plan promises notification without specifying the timeline or the channels. The plan does not address the acquisition scenario at all.

None of these is automatically disqualifying. A firm with a weak written plan but strong practices and a thoughtful advisor may still be the right fit for many clients. The weakness in the plan is just a signal that the topic deserves more discussion during the engagement conversation. The FINRA investor education materials describe what continuity arrangements are typically expected of advisory and brokerage firms.

The Periodic Review

A continuity plan that was written five years ago and has not been updated is providing weaker guarantees than one that is reviewed annually. The advisory industry changes (firms merge, regulations evolve, technology changes), and the continuity plan needs to evolve with it.

A strong firm typically maintains:

An annual review of the continuity plan by firm leadership. A documented record of the changes from year to year. A summary of any new arrangements or modified protocols. An opportunity for clients to request the current version of the plan.

Clients who engage with the continuity topic during engagement and then never revisit it are missing the ongoing nature of the question. A useful practice is to ask for the current version of the continuity plan every three to five years, or whenever there are changes at the firm.

The Educational Frame

This piece is an educational walkthrough of what good continuity planning looks like in the advisory industry. It is not investment, legal, or tax advice. The specific decisions about any client's advisor relationship belong in a conversation with the advisor, the firm, and the client's own counsel.

For a broader framework of advisor selection topics, including succession, fiduciary status, fee transparency, and credential verification, the resources at Capivise cover the engagement-conversation framework in detail. Other useful resources for the continuity conversation include the SEC's investor.gov, FINRA's investor education, NAPFA, and AICPA, all of which publish independent educational material on advisor selection topics.

The Underlying Point

The continuity plan is the artifact that converts the advisor's verbal assurances about long-term reliability into something the client can actually evaluate. Reading the document carefully, comparing it against the conversation, and revisiting it periodically are practical steps that engage with the topic substantively. Beyond that, the specific evaluation depends entirely on the client's situation and the advisor's situation.

What good looks like, in the end, is a firm that has thought about the question before the client raised it, has documents to share, and engages with the conversation constructively. Anything less is a topic worth probing further before signing the engagement letter.

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How to Document Your Financial Plan So Any Advisor Can Pick It Up

A common but rarely discussed reality of long-term advisor relationships is that the institutional knowledge of the client's situation lives somewhere. Sometimes it lives in the advisor's head, sometimes in the firm's records, and rarely in the client's own files. The third option is the most valuable for continuity, because it survives every transition the advisor and the firm might experience.

This walkthrough covers how to organize a personal financial documentation file that any future advisor could pick up and use. It is educational only and is not investment, legal, or tax advice. The specific contents of any client's documentation belong in a conversation with their advisor, the firm, and their own counsel.

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Why Client-Side Documentation Matters

Advisor relationships are managed by the advisor, but they exist for the client. The records that document the relationship therefore have value for the client independent of the advisor. When the relationship ends (the advisor retires, the firm is sold, the client moves) the records that survive are the ones the client has kept themselves.

A client with their own organized documentation can:

Engage a new advisor more efficiently, because the new advisor does not have to reconstruct the situation from scratch. Provide context to other professionals (tax advisor, attorney, insurance) without depending on the financial advisor's records. Coordinate during family events (a parent's illness, an estate matter) when the financial advisor may not be the primary contact.

The documentation is not a substitute for the advisor's records. It is a complement that ensures the client retains ownership of the institutional knowledge regardless of what happens to the advisor relationship.

The Core Document Set

A practical client-side documentation file typically includes:

A current financial plan summary. Not the full advisor-prepared plan (which may run to dozens of pages) but a one to three page summary that captures goals, situation, constraints, and current allocations. The summary is something the client can update annually and share with new professionals as needed.

Account inventories. A list of every financial account (banks, brokerages, retirement accounts, business interests) with institution names, account numbers (or last four digits for security), and the purpose of each account. This document is also useful for estate planning and for any family member who may need to coordinate during incapacity.

Estate documents. Copies of the will, trusts, powers of attorney, healthcare directives, and beneficiary designations on retirement accounts and life insurance. The originals stay with the attorney or in a safe deposit box. The copies in the personal documentation file allow the client to review and update as needed.

Tax documents. The most recent three years of complete tax returns, current tax projections, and notes on any unusual tax positions. These are useful for new advisors and for the tax advisor on the team.

Insurance documents. Summary of life, disability, long-term care, and umbrella liability policies, including the issuing company, policy number, coverage amount, and beneficiary.

Records of major financial decisions. Notes from advisor conversations about major decisions (a business sale, an inheritance, a real estate purchase). These are the institutional memory of the relationship that would otherwise live only in the advisor's notes.

The AICPA personal financial planning resources cover the kinds of documents typically maintained as part of a coordinated planning relationship.

Where to Keep the Documents

For physical documents, a small filing system at home works well for routine reference, with copies of originals in a safe deposit box for security. Some clients use a fireproof home safe in addition.

For digital documents, a password manager or a secure cloud service with two-factor authentication is the standard. The exact tool matters less than the consistency. A documented file structure that the client can access from anywhere is more useful than a perfect tool the client cannot find when they need it.

A useful practice is to maintain a single index document that lists where everything is stored. The index lives in two or three places: a copy with the attorney, a copy with a trusted family member, and a copy in the client's own files. If the client becomes incapacitated, the family member or attorney can use the index to find everything else.

The FINRA investor education materials describe what records advisory and brokerage firms are required to keep, which can serve as a reference for what the client-side records should include for cross-checking.

Updating Cadence

The documentation file does not need to be updated weekly. A few useful cadences:

Annual review of the financial plan summary, the account inventory, the insurance summary, and the tax projections. This typically aligns with the annual review meeting with the financial advisor.

Triggered updates for major life events. A change in employment, a business transaction, an inheritance, a death in the family, a real estate purchase or sale.

Triggered updates for estate document changes. A new will, a new trust, a change in beneficiary designations.

The cadence is light. The benefit is large. A documentation file that is updated once a year provides meaningfully more continuity than the same file built once and never touched.

What to Bring to a New Advisor

When engaging a new advisor (for the first time, or after a transition), the documentation file becomes the input for the engagement conversation. Bringing the file allows the new advisor to:

Understand the client's situation without a multi-meeting discovery process. Coordinate with the other professionals on the team without recreating the relationship from scratch. Identify gaps in the client's documentation that may need attention.

The new advisor will typically still want to prepare their own documents (a fresh financial plan, an investment policy statement, a current Form ADV). The client-side documentation is the starting point, not the final word. But it shortens the onboarding process substantially and surfaces topics that might otherwise take months to come up.

For the broader context on the engagement conversation, this independent advisor selection guide covers the topics worth raising with a new advisor, including the continuity arrangements that determine how the next transition might go.

The Family Coordination Dimension

A documentation file that the client maintains is also useful for family coordination. In situations involving incapacity, a death, or even a planned multi-generational transition, the family members who become involved need to find the information quickly.

A useful practice is to inform at least one trusted family member of:

The existence of the documentation file. The location (home, safe deposit box, digital). The means of access (the password manager, the safe combination, the attorney's contact information).

This is not the same as sharing the contents. The family member does not need to know the specific account balances or the specific provisions of the will. They need to know where to find the information if the situation calls for it.

The Consumer Financial Protection Bureau's resources on managing someone else's money cover the broader context of family financial coordination, which is the same continuity question viewed from the family side.

The Educational Frame

This walkthrough is educational only. It does not constitute investment, legal, or tax advice. The specific contents of any client's documentation file, and the specific arrangements for storing and sharing it, are conversations to have with the advisor, the attorney, and other professionals.

The documentation file is one component of a broader continuity framework that includes the advisor's own arrangements, the firm's continuity plan, and the coordination across the broader professional team. Maintaining the client-side documentation is the part the client controls directly, and it provides continuity that survives every change on the advisor side.

The Underlying Principle

The institutional knowledge of a long-term financial situation has to live somewhere. The client-side documentation file ensures that some version of it lives where the client controls it, independent of any specific advisor relationship. This is a small ongoing effort with outsized long-term value.

The file does not have to be perfect. It has to exist. A two-page financial plan summary, a single account inventory document, copies of the major estate documents, and an index of where everything is stored are enough to provide meaningful continuity. The refinement happens over years of annual reviews.

The continuity question is broader than any single advisor relationship. The client who maintains their own documentation is the client whose continuity is largely under their own control.

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How to Verify an Advisor's Registration and Disciplinary History Using Public Regulator Tools

Before signing any advisory agreement, a household has access to several free public registries that confirm the candidate's registration and surface any disciplinary history. The searches take a few minutes and provide a foundation that the advisor's own marketing cannot replace.

This walks through the registries, what each one covers, and how to use them effectively. It is an educational overview, not advice on any specific candidate.

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Step 1: Identify the candidate's registrations

A financial advisor in the United States typically holds one or more of these registrations: investment adviser representative (IAR) at a registered investment adviser, registered representative at a broker-dealer, or insurance licenses at the state level. Some hold all three.

Each registration is checked through a different public registry. The first step is to ask the candidate directly: "What firm are you registered through, and what types of registration do you hold." A clear answer is the foundation for the verification searches that follow.

If the candidate is unwilling or unclear about their registrations, that is itself informative. A registered professional is required to be transparent about their registration status under both Advisers Act rules and broker-dealer rules.

Step 2: Use the Investment Adviser Public Disclosure search

For registered investment advisers and their representatives, the SEC's Investment Adviser Public Disclosure search is the authoritative public registry. It is free and updated as filings come in.

Enter the firm's name or the individual's name. The search returns: the firm's registration status, the states it is registered in, the individuals associated with the firm, and a downloadable copy of the firm's Form ADV.

For an individual investment adviser representative, the search returns the individual's CRD number, work history, registrations held, and any disclosed disciplinary events.

The Form ADV brochure is downloadable as a PDF. It is the main disclosure document and should be read before the first interview.

Step 3: Use FINRA BrokerCheck

For broker-dealer registered representatives, FINRA BrokerCheck is the authoritative public registry. It is also free and updated as filings come in.

BrokerCheck covers the same kinds of data as IAPD: firm registration status, individual registrations, work history, and disciplinary events. For dually registered professionals (those holding both IAR and registered representative status), BrokerCheck and IAPD will both show entries, sometimes with different detail levels.

Always run both searches for dually registered candidates. The two systems sometimes have small data inconsistencies that are useful to understand.

Step 4: Read the disciplinary history carefully

The disciplinary history is the section most worth reading carefully. The expected default is no disclosed events.

If there are disclosed events, read them in detail. Categories that typically appear: customer complaints, regulatory actions, employment terminations for cause, civil judgments, criminal events.

Context matters. A single old customer complaint that was resolved without action is different from a pattern of recent customer complaints. A regulatory action from twenty years ago that resulted in a small fine and a continuing-education requirement is different from a recent action that resulted in suspension.

The disclosure entry itself usually includes a short narrative. Read it. The SEC's Investor.gov has additional guidance on how to weigh disclosed events.

If there is a pattern that gives pause, ask the candidate directly during the interview. A candidate who engages with the disclosure history transparently is showing the kind of relationship style they will bring to harder conversations later. A candidate who deflects or downplays disclosed events is providing useful information of a different kind.

Step 5: Check the firm-level history

Individual registrations are one piece. The firm's history matters too. Both IAPD and BrokerCheck have firm-level disclosure history.

A firm with a clean individual but a problematic firm history (regulatory actions, customer complaints, history of supervisory failures) is a more complicated assessment than a firm with both clean. The individual may be excellent and the firm may be the issue, or the individual's clean record may reflect a short tenure that has not yet generated history.

For firms registered with multiple regulators (SEC, FINRA, state securities), check each registry that applies.

Step 6: Verify professional designations

Many advisors list professional designations (CFP, CFA, ChFC, AIF, others). Each designation has a sponsoring organization that maintains its own public verification system.

The Certified Financial Planner Board of Standards verifies CFP certification at its public search and includes any disciplinary history within the CFP system.

The CFA Institute verifies CFA charterholder status. The American College verifies ChFC and other designations. The Investment Adviser Association maintains some additional resources.

Designation verification is worth doing because not every claimed designation is current, and some self-styled "designations" are not from accredited bodies. The sponsoring organization's verification confirms both current status and any disciplinary actions within the designation's own oversight system.

Step 7: Look at NAPFA membership (where claimed)

If a candidate claims membership in the National Association of Personal Financial Advisors, verify membership at napfa.org. NAPFA membership requires fee-only compensation and a fiduciary commitment, so verification is a meaningful filter for households who want those structural features.

NAPFA is one of several advisor membership organizations. Others include the Garrett Planning Network (hourly-fee specialists), the XY Planning Network (Gen X and Gen Y focused), and others. Each has its own membership criteria and public directory.

Step 8: State-level insurance license check (where relevant)

For advisors who also hold insurance licenses, the National Insurance Producer Registry maintains a public license check. State insurance departments maintain their own license databases as well.

The insurance-license check matters for advisors recommending annuities, life insurance, or other insurance products. Verify the license status in any state where products would be sold.

Step 9: Document the verification

Keep a short written record of the verification: which registries were checked, what was found, and what topics need follow-up during the interview.

The record is useful for two reasons. First, it makes the interview more focused because the topics that need clarification are already identified. Second, it creates a baseline that can be re-checked annually to confirm registrations remain in good standing.

What the verification will not tell you

Public registries are good at what they do. They are not designed to tell you everything.

They will not tell you whether the advisor's personality fits the household's preferences. They will not tell you whether the advisor has specific experience with situations like yours. They will not tell you what the actual fee will be after negotiation. They will not tell you how the firm handles communication or how often you can expect to hear from them.

Those topics belong in the interview. The verification confirms the structural foundation; the interview fills in the relationship-level details.

How this fits into a larger advisor-selection process

The verification is the first filter. It rules out candidates whose registrations are not in good standing or whose disclosed history raises material concerns. The interview is the second filter, where the topics that the registries cannot answer get asked directly.

For an educational overview of advisor structures and the broader topics to clarify before signing, the hub piece is the longer article on RIA vs broker-dealer structures. For the Capivise homepage and a starting point on the broader advisor selection process, the advisor verification page covers the public registry workflow with concrete steps and links.

A short closing checklist

For every candidate, in order: identify registrations held, search IAPD for any RIA registration, search BrokerCheck for any broker-dealer registration, read the disciplinary history carefully, verify any professional designations through the sponsoring organization, check any membership claims (NAPFA, Garrett, others), document the findings.

The whole process takes about thirty minutes per candidate. For a search that may produce a multi-decade relationship, thirty minutes is a small investment that meaningfully changes the quality of the rest of the process.

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Understanding Fee-Only vs Fee-Based vs Commission-Based: A Guide for Households Starting Their Advisor Search

The three most common compensation models for financial advisors are fee-only, fee-based, and commission-based. The labels sound similar enough that they often blur together for households new to the search, especially because all three can be used by professionals with similar job titles and similar offices.

This is a guide-style overview of what each model actually means in operation and what topics to clarify before choosing. It is not advice on which model to pick. The right model depends on the household's situation, the kinds of services being scoped, and personal preferences about how advisors are compensated.

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Fee-only

A fee-only advisor is compensated only by client fees. The client pays the advisor directly, and the advisor receives no commissions, no revenue sharing, and no third-party compensation from product issuers or affiliates.

The fees can take several forms. Assets under management (AUM) fees, where the advisor is paid a percentage of the assets they manage. Flat retainers, where the advisor is paid a fixed annual fee. Hourly billing, where the advisor is paid for time spent on the relationship. Project fees, where the advisor is paid for specific deliverables (a written financial plan, a specific portfolio analysis).

The model is generally considered the cleanest from a conflict-of-interest standpoint because no third party is paying the advisor. The default tensions are still present (AUM models can disincentivize moving assets out of the advised account, flat retainers can disincentivize ending the relationship), but the structural conflicts are typically simpler than in the other models.

The National Association of Personal Financial Advisors maintains a directory of fee-only fiduciary advisors at napfa.org. Membership requires fee-only compensation and a fiduciary commitment, so the directory is a filter for households who want to start with fee-only candidates.

Fee-based

A fee-based advisor is compensated by a mix of client fees and third-party compensation. Some accounts pay an AUM fee or other client-direct fee. Other parts of the relationship involve commission-paying products (annuities, certain insurance products, certain investment products).

The model is common at large financial services firms where the advisor is dually registered (both as an investment adviser representative and as a broker-dealer registered representative). The client may receive ongoing advice under a fee-based RIA program and transact in specific products under a separate commission-based arrangement.

Topics to clarify with a fee-based advisor before signing: which parts of the relationship are fee-paid and which are commission-paid, what the total annual compensation is, and how the advisor decides which approach to use for any given recommendation.

The model is legal and widely used. It requires the household to track which parts of the relationship are under which structure, which is operationally more complex than fee-only.

Commission-based

A commission-based advisor is compensated primarily by commissions on the products sold. The client does not pay a direct fee; the product issuer pays the advisor a commission, sometimes upfront and sometimes as trail compensation over the product's life.

The model is the traditional broker-dealer model and is still common for transactional relationships. It is also common for insurance-heavy practices, where annuities, life insurance, and other products generate commissions.

Topics to clarify with a commission-based advisor before signing: what the total commission and trail compensation is on each recommended product, what comparable products would generate (lower or higher commissions, lower or higher costs), and what alternatives exist that the advisor's firm does not sell.

The model has default conflicts that the advisor and the firm are required to disclose and address under Regulation Best Interest. The SEC's Investor.gov covers the disclosure and conflict-of-interest framework that applies.

What "fiduciary" means and does not mean across these models

The word "fiduciary" is often associated with the fee-only model, and there is a meaningful overlap. Most fee-only advisors operate at independent registered investment advisers, which are subject to fiduciary duties under the Investment Advisers Act of 1940.

But fiduciary status is determined by registration, not by compensation. A fee-only advisor at an RIA is a fiduciary in their RIA capacity. A fee-based advisor who is dually registered may be acting as a fiduciary when working as an investment adviser representative and as a broker-dealer registered representative when working in that capacity. A commission-based advisor working only at a broker-dealer is not operating under the Advisers Act fiduciary standard but is subject to Regulation Best Interest.

The SEC's Investment Adviser Public Disclosure search and FINRA BrokerCheck are the public registries for verifying which registrations a candidate has.

How to think about which model fits a household's situation

The choice between models depends on what the household is actually scoping.

For ongoing portfolio management plus financial planning where the relationship is intended to be long-term and continuous, fee-only AUM or flat-retainer models tend to fit because the compensation structure aligns with the long-term relationship.

For transactional needs (one-off rollover, specific product implementation, occasional account servicing), commission-based models can fit because the work is bounded and the compensation is bounded with it.

For complex relationships that involve a mix of ongoing planning, specific product transactions, and access to specialized strategies, fee-based models often arise naturally because the household has multiple needs that map to different compensation arrangements.

None of these are rules. Many households work well with a fee-only advisor for everything, including transactional needs. Many households work well with a commission-based advisor for what looks like an ongoing relationship. The compensation model is one input to the decision; relationship style, advisor expertise, and personal fit are others.

Topics to clarify regardless of model

Three topics that apply across all three models:

What is the total annual compensation from the relationship, in dollar terms, for a household of your size. The advisor should be able to answer this in concrete terms after a brief conversation about your situation.

What conflicts of interest does the compensation model create, and how does the firm manage them. The disclosure documents cover this; the conversation is to confirm the documents match what is said in person.

How does the compensation change if the relationship shifts (more assets, fewer assets, additional services, fewer services). Understanding the change function helps avoid surprises later.

A short note on hybrid arrangements

Some households work with multiple advisors simultaneously. A fee-only fiduciary for ongoing planning and portfolio management; a commission-based broker for specific products the fee-only advisor cannot service (private placements, certain annuities, certain insurance products).

These arrangements can work well when the two advisors are aware of each other and the household has clarity on which is acting in which capacity. Topics to clarify with both: how do you coordinate with the other professional, and what overlaps or gaps in scope are intentional.

For the longer educational article on advisor structures and the topics to clarify with each, the hub piece is Independent RIA vs Broker-Dealer Representative: Topics to Clarify With Each Before Choosing from Capivise's educational overview.

What to do this week

If a household is currently scoping advisors, a small set of steps cuts through most of the compensation-model confusion.

Identify which compensation model each candidate operates under, by asking directly and verifying through the disclosure documents.

For each candidate, request the Form CRS (and Form ADV Part 2A for RIA candidates). Read the fee and conflict-of-interest sections before any interview.

In the interviews, ask the three topics above (total annual compensation, conflicts of interest, change function) explicitly.

Compare answers across candidates on a common framework. The compensation model that fits is the one whose answers feel honest and aligned with the household's actual needs.

The decision is not irreversible. Advisory relationships can be ended. But the upfront clarity makes the relationship that follows much smoother, and that is the gain to capture.

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7 Educational Resources to Review Before Discussing Tax-Efficient Reinvestment With an Advisor

Households thinking about tax-efficient reinvestment after a liquidity event often want a baseline understanding of the relevant concepts before sitting down with a wealth advisor or a tax advisor. The goal is not to replace the professional conversation; it is to come prepared with enough context to make the conversation productive.

This roundup covers seven educational resources that often come up in those preparation conversations. None of them provide investment, tax, or legal advice. Each one offers educational background on a piece of the broader picture that an advisor can then place in the household's specific context.

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1. Investor.gov by the Securities and Exchange Commission

The Investor.gov site published by the Securities and Exchange Commission is a comprehensive public education resource covering investment basics, account types, fraud awareness, and advisor selection.

The site covers topics from very basic (what is a stock) to fairly advanced (specific account features and disclosure requirements). It is a useful first stop for households who want a baseline before discussing more specific topics with an advisor. The advisor checking and disclosure tools the site provides are also useful inputs to the advisor evaluation process.

The site is updated regularly and the content is non-promotional, which makes it a stable reference point. It is one of the few resources that consistently shows up in advisor conversations as a recommended starting point for further reading.

2. The IRS website and publications

The Internal Revenue Service publishes the technical rules that govern most of the tax-related topics that come up in wealth planning. The publications cover retirement accounts (Publication 590-A and 590-B), capital gains and losses (Publication 550), charitable contributions (Publication 526), and many other topics.

The IRS publications are the source of truth for the tax rules themselves. Educational summaries are often easier to read, but they can introduce inaccuracies. When a specific rule matters for a decision, the IRS publication is usually the definitive reference.

A topic worth clarifying with a tax advisor is which publications are most relevant to the household's specific situation. The advisor can point to the publications that apply and translate the technical language into the household's context.

3. FINRA BrokerCheck

The Financial Industry Regulatory Authority maintains BrokerCheck, a public-record search tool that lists registration history, disclosures, and licensing information for brokers and investment advisor representatives.

BrokerCheck is a standard tool in advisor evaluation. The search returns the registered representative's employment history, regulatory actions, customer disputes, and licensing details. The information is public record, and the tool is free to use.

A topic worth clarifying with any prospective advisor is the household's interpretation of the BrokerCheck record. Some disclosures are routine and not concerning. Some are more significant. The advisor's willingness to discuss the disclosures candidly is often informative in itself.

4. The AICPA personal financial planning resources

The American Institute of Certified Public Accountants maintains educational resources on personal financial planning topics, including tax planning, retirement planning, estate planning, and risk management.

The AICPA materials are written from a CPA perspective, which often emphasizes the tax dimensions of planning decisions. Households thinking specifically about tax-efficient reinvestment often find this perspective useful as a complement to the wealth-management perspective they may already have heard.

The materials are educational and non-promotional, which makes them a useful reference. They are also a useful resource for households evaluating whether to engage a CPA or a CPA-PFS (Personal Financial Specialist) as part of the planning team.

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5. NAPFA fee-only advisor education

The National Association of Personal Financial Advisors is a professional association of fee-only financial advisors. The association maintains educational materials on financial planning topics and a public directory of member advisors.

The fee-only model is one of several compensation models in the advisor industry. Each model has its tradeoffs, and the NAPFA materials cover the implications of the fee-only structure specifically. Households evaluating different advisor compensation models often find this perspective useful.

A topic worth clarifying with prospective advisors is the compensation structure being proposed and how it aligns with the household's interests. The NAPFA materials offer background that can inform the household's questions.

6. The CFP Board public-facing materials

The Certified Financial Planner Board of Standards maintains the standards for the CFP designation and a public-facing site with educational materials on financial planning topics.

The CFP designation is one of several professional credentials that show up in advisor selection. The CFP Board materials describe the educational requirements, the code of ethics, and the planning process that CFP holders are trained in. They also include a verification tool for CFP designation.

A topic worth clarifying is whether the advisor's credentials match the household's needs and whether any specific certifications (CFP, CPA, CPA-PFS, ChFC) are particularly relevant for the household's situation.

7. The Capivise advisor matching resources

The Capivise website and its related educational resources cover topics specifically relevant to households navigating advisor selection in the context of liquidity events, business sales, inheritance, and other significant financial transitions.

The Capivise materials focus on the questions households can productively ask during advisor selection and the topics that often come up in initial conversations. The longer Capivise article on asset location strategy after a liquidity event is one example of the kind of structured educational content the platform produces.

The resources do not replace professional advice. They are intended as preparation material for the conversations the household will then have with the specific advisors they engage.

How to use these resources together

A useful way to approach the seven resources is to start with the broadest (Investor.gov) for general background, then move to the topic-specific ones (the IRS publications, the AICPA materials) for the household's particular situation, and use the credentialing and selection resources (BrokerCheck, NAPFA, the CFP Board, Capivise) as inputs to the advisor evaluation process.

The reading does not have to be exhaustive. Spending three or four hours across the resources before the first serious advisor conversation tends to make the conversation more productive. The advisor can then build on the household's existing context rather than starting from scratch.

The point of the preparation is not to become an expert. It is to become an informed client who can engage with the advisor as a partner rather than as a passive recipient of recommendations. That difference shows up in the quality of the conversations and the decisions that follow.

What this article does not do

This article is educational. It does not provide investment, tax, legal, or accounting advice. The seven resources listed above are educational references; the appropriate use of the information they contain depends on the household's situation and benefits from the input of licensed professionals.

The right next step for almost any reader thinking about tax-efficient reinvestment after a liquidity event is to coordinate with a wealth advisor and a tax advisor. The resources above are intended to help the household come prepared to that conversation, not to replace it.

Preparation tends to pay back across many planning conversations. The hours spent reading public educational materials before the first advisor meeting are often the highest-leverage hours of the entire planning process. The advisor's time is usually scarce; the household's preparation is what makes that time most useful.