Q. How do I pick a financial advisor and how much should I expect to pay for their services?
A. At a high level, there are 5 types of financial advisors out there with various titles -
1. Financial Advisor
A financial advisor is sometimes used as a general term to mean someone who advises you on your finances. However, a true financial advisor is a Registered Financial Advisor (RIA) or Investment Advisor Representative (IAR). A financial advisor is held to the highest ethical standard. Additionally, a financial advisor may have other qualifications (like a CFP® or CFA designation).
2. Financial Planner
A financial planner is a type of financial advisor. However, there are no requirements to become a financial planner. A financial planner can help you with your overall wealth management. This includes financial planning and investment advice, tax planning, estate planning, insurance planning, and retirement planning. Usually, you have an ongoing relationship with your financial planner.
A financial planner may hold different designations including the Certified Financial Planner (CFP®), Certified Financial Analyst (CFA), Chartered Financial Consultant (ChFC), or Certified Investment Management Analyst (CIMA). For purposes of hiring a personal financial planner, the most important designation to discuss is CFP® – also known as certified financial planners.
3. Certified Financial Planner™ (CFP®)
A Certified Financial Planner™ is a type of financial planner who can help you with most of your financial planning. A CFP® designation means that the planner had specific training, passed an exam, met an experience requirement, and will continue to meet continuing education requirements. A CFP® has a fiduciary duty to act in the best interest of her client — a key distinction from other planners.
4. Registered Representative
A registered representative is a term used to describe financial professionals who are paid commissions for the financial products they sell. Think of a finance professional who holds his Series 6 or Series 7 under this category.
5. Investment Advisor or Wealth Manager
An investment advisor or wealth manager is someone who helps you primarily with your investments. This means that they manage your investments, but they may not advise you on tax, estate, insurance, or retirement planning. An investment advisor will help you determine your risk tolerance, asset allocation, and other investment advisory areas specific to your investments.
Think of an investment advisor as someone who does just one part of what a financial planner does, because the financial planner will also conduct investment advisory services (generally).
In our next blogpost, we will discuss how much you should expect to pay for a financial adviser's service.
A. At a high level, there are 5 types of financial advisors out there with various titles -
1. Financial Advisor
A financial advisor is sometimes used as a general term to mean someone who advises you on your finances. However, a true financial advisor is a Registered Financial Advisor (RIA) or Investment Advisor Representative (IAR). A financial advisor is held to the highest ethical standard. Additionally, a financial advisor may have other qualifications (like a CFP® or CFA designation).
2. Financial Planner
A financial planner is a type of financial advisor. However, there are no requirements to become a financial planner. A financial planner can help you with your overall wealth management. This includes financial planning and investment advice, tax planning, estate planning, insurance planning, and retirement planning. Usually, you have an ongoing relationship with your financial planner.
A financial planner may hold different designations including the Certified Financial Planner (CFP®), Certified Financial Analyst (CFA), Chartered Financial Consultant (ChFC), or Certified Investment Management Analyst (CIMA). For purposes of hiring a personal financial planner, the most important designation to discuss is CFP® – also known as certified financial planners.
3. Certified Financial Planner™ (CFP®)
A Certified Financial Planner™ is a type of financial planner who can help you with most of your financial planning. A CFP® designation means that the planner had specific training, passed an exam, met an experience requirement, and will continue to meet continuing education requirements. A CFP® has a fiduciary duty to act in the best interest of her client — a key distinction from other planners.
4. Registered Representative
A registered representative is a term used to describe financial professionals who are paid commissions for the financial products they sell. Think of a finance professional who holds his Series 6 or Series 7 under this category.
5. Investment Advisor or Wealth Manager
An investment advisor or wealth manager is someone who helps you primarily with your investments. This means that they manage your investments, but they may not advise you on tax, estate, insurance, or retirement planning. An investment advisor will help you determine your risk tolerance, asset allocation, and other investment advisory areas specific to your investments.
Think of an investment advisor as someone who does just one part of what a financial planner does, because the financial planner will also conduct investment advisory services (generally).
In our next blogpost, we will discuss how much you should expect to pay for a financial adviser's service.
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