Commission-Based Advisors: How They Get Paid and What It Means for Your Money

When you work with a commission-based advisor, a financial professional who earns money by selling you investment products like mutual funds, insurance, or annuities. Also known as sales-oriented advisors, they’re paid when you buy something—not when you get better results. That sounds simple, but it changes everything about how they think about your money.

Unlike fee-only advisors, who charge a flat rate or percentage of assets under management and have no incentive to push specific products, commission-based advisors make more when you buy more. That means they might push a fund with a 5% commission over one with 0%—even if the 0% fund performs better. This isn’t always fraud. It’s often just how the system works. But if you don’t know how they’re paid, you’re not really making an informed choice. The investment commissions, the hidden fees built into products that reward the advisor, not you can add up to thousands over time. A single annuity sale might pay $10,000 in commission. That’s money taken from your returns, not added to them.

Most people assume their advisor works for them. But if the advisor’s paycheck comes from the company selling the product, their loyalty is split. You’re not just paying for advice—you’re paying for a sales transaction. That’s why so many investors end up with high-cost funds they don’t understand, or insurance policies they never needed. The advisor conflicts of interest, the invisible tension between what’s best for you and what pays the advisor aren’t always obvious. They’re baked into the system.

That doesn’t mean all commission-based advisors are bad. Some do good work despite the structure. But knowing how they’re paid lets you ask the right questions: How much will you earn if I buy this? Is there a cheaper version that does the same thing? Can you show me the fee schedule? If they hesitate, dodge, or can’t answer, that’s a red flag.

What you’ll find below are real examples of how commission structures shape advice, how to spot hidden costs in your portfolio, and what to do when you realize your advisor’s interests don’t match yours. From mutual fund loads to life insurance traps, these posts break down exactly how the system works—and how to protect yourself from paying more than you have to.