Passive funds, or index funds, differ from active portfolio management in that they don’t try to pick individual securities or time the market. Their goal is to follow strict guidelines and capture the performance of the market segment they are tracking, such as the S&P 500. Unburdened by the costs of research and decision making, these funds typically come at a very low cost to the investor, leaving them to keep more of their returns.
Fee-only financial advisors receive their compensation exclusively through fees paid by the client. By not earning sales commissions, they eliminate the conflicts of interest that plague most financial advisors.