Even if you understand all tax laws and investment strategies, it's always helpful to get expert support. Fortunately, there are many financial professionals who are keen to offer their advice. The Regulatory Authority for the Financial Industry (FINRA) defines 183 professional designations on its website.
Some titles are more generic, while others require specific training and experience. Two of the most popular titles are financial advisors and financial planners. These titles are often used interchangeably, but they refer to various capabilities and offers. We distinguish in our guide what these titles really mean to help you find a financial professional that meets your needs.
Financial advisor is a general term, which may include stock brokers, insurance agents, money managers, estate planners, bankers and more. Think of the comparison between a financial advisor and a financial planner, such as a funnel with a financial advisor. A financial planner is a type of financial advisor, continuing with this funnel analogy and going further down.
For a professional who helps to manage your money, this is a broad term. You pay the consultant and they help with any number of money-related tasks in exchange. A financial advisor can help manage investments, broker the sale and purchase of stocks and funds or create a comprehensive plan for property and taxation. If the advisor works with the public, they must be licensed under Series 65. Depending on the services provided, there are many other financial advisor credentials that the advisor may hold.
Financial Planner The financial planner is a type of financial advisor who helps companies and individuals to achieve long-term financial objectives. The planner may have an investment, tax, retirement and/or estate planning specialty. In addition, the financial planner may hold different licenses or designations. For instance, the Certified Financial Planner (CFP), the Chartered Financial Analyst (CFA), the Chartered Financial Consultant (ChFC) and the Certified Investment Management Analyst (CIMA) are some of the designations that a financial planner may have. The financial planner must complete a different set of educational, examination and work history requirements in order to obtain each of these licenses.
Before you hire a financial planner or financial adviser, make sure you understand what you pay for. Finding out what advice you need can be challenging, but it can be even harder to know if you get it at a fair price. They must follow the Board's code of ethics and conduct, which means that instead of their own, they must always provide advice based on their best interests. You can go to the CFP website directly to find a CFP near you or verify the certification of a consultant.