Financial health should be everyone’s priority. That’s something more and more people have realized as of late. This realization may have stemmed from the pandemic, where the fragility of life and the potential uncertainty of finances have confronted society.
With a global health scare revealing itself out of nowhere, many have learned that everything you have worked hard for can disappear in just a blink of an eye. And this situation may happen if your finances are not in order. For instance, a trip to the hospital or unforeseen retrenchment can quickly deplete your savings.
Indeed, it’s high time to take financial literacy seriously. Part of looking earnestly at the matter is coming to terms with the fact that you may need to help of an expert to achieve the best possible result from your financial goals and plans. That’s where a financial advisor comes in.
If you’re looking for expert financial help, this article may be for you. Read below to know more about the different types of financial advisors to help you choose the best one for your specific needs.
7 Types of Financial Advisors To Choose From
1. Investment Advisor
The SEC uses “investment adviser” as a legal term for financial professionals that must register with the office. The phrase has also become a job title with “adviser” replaced by the more colloquial “advisor.” You can validate an investment advisor’s professional legitimacy by using the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck.
In a nutshell, an investment advisor gives investment tips to clients or manages clients’ existing assets. They can be either a company or an individual. If you have amassed a diverse financial portfolio and plan to expand further, an investment advisor’s what you need on your team.
National professional associations provide licenses to aspiring accountants who meet a given state’s educational and testing requirements. The provided licenses allow accountants to pursue private practice. Licensed accountants may also work for an accounting firm or a company’s financial department.
No matter if they are a freelancer or employed, accountants perform the same tasks, such as auditing and analyzing financial statements.
Accountants are most suited to routine financial requirements. If you hire one, you’ll have a professional file income taxes on your behalf. You will also benefit from receiving deductions you may overlook when doing your taxes yourself. Moreover, your accountant will know how to apply for a tax extension if you need one.
3. Certified Financial Planner (CFP)
A financial advisor with a bachelor’s degree and who completed 30 hours of CFP Board-approved courses is eligible to become a certified financial planner. However, they must also pass a comprehensive CFP certification examination. Once they have done everything, they must vow to abide by the CFP Board’s code of ethics and rules of conduct.
Hiring a certified financial planner assures you that you’re partnering with an advisor who has earned their title. However, remember that anyone can assume the title of a financial planner. So always look for the prefix certified since certified financial planners will oversee asset management on your behalf.
4. Broker-dealers and Brokers
These financial professionals are usually FINRA members. They are also SEC-registered financial planners. Their job includes buying and selling securities such as bonds, stocks, and mutual funds. When buying or selling on behalf of a client, they are called “brokers.” However, the type of securities a broker can buy and sell depends on their licenses.
For instance, those who have passed the Series 6 exam can only engage in transactions involving variable annuities, mutual funds, and similar products. Meanwhile, passing the Series 7 exam allows a broker to sell additional securities.
5. Insurance Agents
You’re probably not aware, but insurance agents are financial advisors, too. That’s because their job entails recommending financial products to clients. In their case, it’s the insurance that they offer. It’s safe to argue that insurance agents are the most popular financial advisors out there, given how everyone requires or has at least one type of insurance plan at any given time.
The insurance industry provides various policies, from health to retirement. An insurance agent can give you meaningful information on which type of insurance you need.
6. Wealth Managers
The term “wealth manager” is more of a marketing label than an actual profession that hinges on certification requirements and licenses. In fact, anyone can brand themselves as a wealth manager. So, if you plan to work with a wealth manager, ask for proof of professional validity.
It’s best to work with a licensed wealth manager with the proper certifications to become a financial advisor, planner, and broker.
As the job title perfectly captures, wealth managers are partial to clients with a financial portfolio amounting to at least $5 million. If that’s where your assets currently sit, a wealth manager is right up your alley.
7. Financial Consultant
This type is another generic financial advisor title that anyone can assume. So, look for a chartered financial consultant (ChFC) to be extra sure. These professionals adhere to The American College’s code of ethics and pursue fiduciary duty.
More importantly, they go through a similar educational background that certified financial planners complete. This type is also a beginner-friendly financial advisor, akin to a financial coach.
Choosing the Best Advisor For Your Financial Needs
When choosing the type of financial advisor to partner with, the first order of business is determining where you are in your financial journey. Are you a relative newbie in the labor market and want to jumpstart a savings account? Or have you amassed considerable wealth thanks to diverse assets that require expert management?
A CPA financial advisor will likely suffice for the former, whereas the latter may necessitate an experienced wealth advisor. Either way, rest assured your finances will be safe in their hands. But it’s still best to stay cautious and thoroughly know who handles your finances.
However, you’re still very much in control of your financial journey. Remember that a financial advisor’s job is to guide you through whatever money concerns you may have and not to act as your replacement.