Navigating the realm of financial planning and investment can sometimes feel like traversing a labyrinth, and rightly so. The landscape is chock-full of diverse investment vehicles, each touting its own unique benefits, risks, and costs. Amidst this intricate web, one type of financial advisor that stands out is the 'Fee-Only Financial Advisor.' This breed of advisors is making waves in the financial world for its transparent and client-centric approach.

Before we delve into the specifics of how fee-only advisors operate, let's first illuminate the essence of this term. A Fee-Only Financial Advisor is a financial professional who is compensated solely by the client, not from commissions associated with product sales or transactions. The salient characteristic here is an absence of conflict of interest. Since these advisors don't earn commissions from any financial products they recommend, their advice is deemed unbiased, and their allegiance rests solely with their clients.

Now, having understood the 'what,' let's focus on the 'how.' Fee-only advisors typically charge their clients in one of three ways: hourly fees, fixed fees, or a percentage of the assets under management. Firstly, the hourly fee model is akin to how attorneys bill their clients. Here, the cost is directly proportional to the time spent on the client's case. Secondly, the fixed fee model involves a predetermined fee for a particular set of services, irrespective of the time spent. Lastly, the percentage of assets under management model is the most prevalent, where the advisors charge a percentage, typically between 0.25% to 1.00%, of the client's total assets under management.

So, why would a Harvard-educated, genius-level intellect opt for a fee-only financial advisor? In essence, this model echoes the fundamental principles of behavioural economics, specifically the concept of 'Principal-Agent Problem.' The principal-agent problem, a theory proposed by Michael Jensen and William Meckling, is a conflict of interest inherent in any relationship where one party is expected to act in the best interest of another. In the financial advisory world, this often manifests as advisors recommending products that offer higher commissions, even if better options exist. Fee-only model mitigates this dilemma since the advisor's compensation is not tied to product sales.

Moreover, this model complies with the fiduciary standard, which obliges advisors to always act in the client's best interest, another concept rooted in common law. Comparatively, the suitability standard followed by commission-based advisors only requires them to recommend suitable products, not necessarily the best ones.

Now, as astute as you may be, it is essential to tread carefully when selecting a fee-only financial advisor. The Council of Economic Advisers estimated that conflicted advice costs investors $17 billion annually in the U.S. Therefore, ensure that the advisor holds a certification like Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA), both of which mandate adherence to the fiduciary standard.

However, the fee-only model is not without its limitations. The cost of advice can be higher in this model, especially for clients with smaller portfolios. Also, advisors might be disincentivized to make bold investment decisions, adhering to safer, more conservative strategies that ensure their fee income.

In summary, fee-only financial advisors, with their commitment to unbiased advice and fiduciary duty, can be an excellent choice for those seeking transparent, client-centric financial guidance. However, like any other investment decision, this too requires careful consideration of the inherent trade-offs, an understanding of the advisor's credentials, and an evaluation of the potential benefits for your unique financial situation.