If you are looking for a service around $ that can assist you with your financial planning, this article is for you. There is a way to get professional help with your personal investments, taxes, budgeting, and everything else related to your money. What you are looking for is a financial advisor - a professional, or a platform that helps with your personal financial planning. Financial advisors can come in many different names and offer slightly distinct services. With that in mind, this article will give you tips on how to select a financial advisor. Then, it will present which type of financial advisor to use according to your needs and pockets.
How to Choose a Financial Advisor in ?
According to Securities and Exchange Commission regulations, any financial professional or company that provides advice to others or issues securities analysis in exchange for a fee is considered an "investment advisor". People that work under this title must register with either the SEC or their state, depending on the amount of money they handle. Other titles and types of advisors are largely unregulated, leaving it up to the investor to identify what to look for. Here are some key tips:
Titles can be meaningless. Many consultants use popular titles - including the “financial adviser” itself – that aren't linked to any unique qualifications. So, don’t assume someone has specific training, credentials, or registration just because they use an official-sounding title.
Determine the type of assistance you need. Identifying what you want the financial advisors to help you with is a great first step towards finding the best match. For example, if you need assistance to deal with taxes, search for an advisor with specialized tax work, including the appropriate qualifications. Or, if you are only looking for investment management, perhaps the best fit will be a low-cost service such as a Robo-advisor.
Search for a fee-only fiduciary. Some financial advisors owe their clients a fiduciary obligation. This means they must behave in their client's best interests rather than their own. The most recommended is to work with a licensed, registered fiduciary. In addition, it is ideal that the advisor works on a fee-only basis, meaning the professional will only be paid directly by you rather than by commissions for selling specific investments or insurance policies.
Always check the advisor’s credentials. It's up to you to check the qualifications and experience of a financial advisor. Regardless of what title, designation, certification, or license they claim to have, the only way to make sure they have the proper qualifications is to check it yourself. Research the advisor’s background before starting to work with them.
Types of Personal Financial Advisors
Now that you know the first steps to look for the best advisor around to take care of your personal finances, it is time to get to know some of the most common types of financial advisors. Understanding what they do and how their services work is vital to know which type is the best fit for you.
If you are a beginner in this whole finance world and you want a professional to offer you the basics, financial coaches can be a fit for you. They concentrate on the fundamentals of financial literacy like how to increase savings and reduce expenses. Financial coaches are ideal to assist you in growing your wealth so maybe, in the future, an investment advisor can assist in managing it.
Certified Financial Planner
Financial advisors who are considered certified financial planners (CFPs) had to go through harsh training. On top of that, they had to meet the experience level required by the CFP Board, and pass the certification exam. Due to this rigorous process, CFPs are demanded and expected to follow high ethical standards, including owing a fiduciary obligation to their clients.
CFPs can offer many different services. Some of these services are not regulated, such as advice on paying off your debt, building a budget, or preparing your capital for retirement. But CFPs also work as investment advisors, which is highly regulated. When looking for a certified financial planner, always check their credentials with the CFP Board. That is an important step especially because the term “financial planner” is not restricted to only people that hold a CFP designation. Thus, someone without the proper qualifications can call themselves “financial planners”.
Similar to certified financial planners; “financial consultant” is not a controlled term. It is a very generic term that can be used by anyone that wishes to do it. However, there is a proper title called “chartered financial consultant” (ChFC) that can be earned by completing qualification requirements similar to CFPs. All ChFCs must comply with The American College’s ethical code. On top of that, they have a fiduciary responsibility to their clients. You can verify if a financial consultant has the ChFC credentials at youradvisorguide.com.
“Investment adviser” is the SEC’s legal term for a financial professional who must be registered. But this term is also used as a job title, usually spelled “advisor”. An investment advisor is an individual or business that is compensated for giving clients investment advice. They may also manage a client’s funds directly. You not only can but also should verify an advisor’s registration. The most trustful way to do it is through BrokerCheck by FINRA (Financial Industry Regulatory Authority).
Broker-Dealers and Brokers
A broker-dealer is a person or a business that buys and sells assets like bonds, stocks, and mutual funds. Broker-dealers can trade on behalf of their clients (as a broker), with their account (as a dealer), or for both. Typically, broker-dealers are registered with the SEC and members of FINRA.
The financial securities that a broker-dealer representative can trade are determined by the licenses they hold. A broker-dealer who has passed the Series 6 test, for example, is only allowed to sell mutual funds, variable annuities, and other related products. The holder of a Series 7 license, however, can trade further securities. The legitimacy of brokers can also be confirmed at the platform BrokerCheck.
Portfolio, Investment, and Asset Managers
They can be called asset managers, investment managers, or portfolio managers. The names can change, but the scope is the same: to manage client investment portfolios. Some of these professionals only work with a client’s investment portfolio. Others also provide additional financial planning services. Since portfolio/asset/investment managers almost always deal with investment advice, they should be registered as investment advisers. But you can never be too careful, so make sure their qualifications are legit on BrokerCheck.
Wealth managers work with a broader approach to a client’s financial life. That is done through holistic financial planning and investing advice. Their services include but are not limited to legal and state planning, accounting, tax services, and retirement planning. This very comprehensive service is usually marketed to high-net-worth individuals since the minimum asset requirement to open an account with a wealth manager can be quite high. This value can go from $250,000 to over $10 million, depending on the firm and professional you choose to hire around
A Robo-advisor is an automated wealth advisory tool that is fairly affordable. For as little as 0.25% of your annual account balance, Robo-advisors use computer algorithms to build and manage an investment portfolio based on your targets and needs. A Robo-advisor could be the right alternative for you if you only need help to handle your investments.