Fee-based compensation for financial advisors is a common method for clients to pay their advisors. This type of compensation includes flat fees, percentages of the client's AUM, and commissions. This type of compensation allows an advisor to provide a full range of services to clients while also tracking their progress. While fee-only compensation is controversial, most people agree that it is the best way to pay an advisor. Fee-based compensation for financial advisors comes in two main forms. One is commissions, which are usually paid up front on products that the advisor has recommended. For example, an advisor might receive a $150 commission when a client invests in a mutual fund. Another type of fee-based compensation is an hourly fee.