I think the point is that any compensation approach creates incentives. Sometimes those incentives are not in the interests of the client.
“Should I pay down my mortgage or should I do a Roth conversion?” Advisors who are explicitly or indirectly compensated as a percentage of AUM have an incentive to argue agains such moves, which may or may not be in the client’s interest, depending upon the circumstance. My fee-based FA has raised the idea of Roth conversions several times, but when they analyze it, they conclude that a conversion does not make economic sense for me. On the other hand, we have done back door Roth investments.
The other FA I use is AUM-based and does get commissions but is a fiduciary. In a previous incarnation, they used to proposed intriguing investment opportunities with high hidden fees. The current team is more straightforward, though they are looking to set up separately managed accounts (both for bonds and for some equities). It can make sense for bonds as they behave a little differently than bond funds but I have a hard time seeing doing something like that for equities.
Since I’m aware of the potential conflicts of interest in either case, I evaluate proposals understanding them, although I think the first group is pretty good about putting the clients front and center.