How do advisors explain how they are paid?

In plain language, early, and somewhere a prospective client will find it without having to ask.

The public understanding of compensation models has improved considerably, and a meaningful share of prospects actively screen on it before making contact. A practice that does not address it is often eliminated before a conversation happens.

What tends to work:

• State the model plainly, in the terms the public now recognizes.
• Explain what it means for the client, in one or two sentences, rather than only naming the structure.
• Put it on the site, not only in a disclosure document. Being findable is the point.
• Avoid characterizing other models. Comparative claims about how other advisors are paid are a common source of problems and rarely necessary to make your own position clear.

How compensation must be described, and what disclosures accompany it, depends on registration type and firm policy. This is one of the areas where wording genuinely matters, so draft it and have it reviewed rather than publishing and revising.

The reviewed version is almost always clearer than silence.

This is general marketing information, not compliance guidance. Requirements differ by registration type, firm and jurisdiction, and change over time. Confirm anything in this area with your compliance function before acting on it.