Other terms to refer to a financial advisor who may or may not have achieved a professional credential include:
- Fiscal Advisor
- Financial Instructor
- Monetary Coach
- Retirement Organizer
- Fortune Manager
- Investment Consultant
What Is an Investment Consultant?An investment advisor is a company or an individual who advises clients and manages their investments. Whether you’re just starting with a modest amount of money or have already built up a six- or seven-figure portfolio, an investment advisor can help you choose the right securities and manage them for you.
An investment consultative firm is called a Registered Investment Advisor (RIA), and its staff who work as consultants are called Investment Advisor Representatives (IARs). While “advisor” with an “o” is the most common spelling, the rules controlling these experts usually use the term “adviser” with an “e,” so you may see either when studying RIAs.
Investment consultants who administer $110 million or more in client wealth must register with the U.S. Securities and Exchange Commission (SEC). Under certain conditions, those supervising less than $110 million in client wealth register with the securities regulator.
How Do Investment Advisors Work with You?
Investment advisors provide personalized advice tailored to your goals and risk tolerance. They can help you select investments, rebalance, or manage your entire portfolio. Most offer brokerage services, too.
RIAs have a fiduciary obligation to their customers, meaning they must act in their clients’ best interests. In other words, a registered investment advisor must recommend the best investment products and services for everyone, not those that pay them the highest commissions or fees.
Typically, an investment advisor charges an annual advisory fee, a percentage of the wealth they manage for you. As of 2019, the average investment advisor fee was 1.17% of assets under management. However, some investment advisors offer flat fees or hourly rates for clients needing more limited advice.
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According to Brian R. Littlejohn, a Certified Financial Planner (CFP) and fiduciary financial advisor with Sherwood Investment Management, specific designations should be sought when selecting an investment advisor.
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“A person looking for investing expertise should seek out a Chartered Financial Analyst (CFA),” he said. “This designation is the gold standard for investment management. It takes an average of 1,000+ hours of study, four years of professional experience, and completing three rigorous exams to be called a CFA.”
Consider a financial planner if you’re looking for broader financial advice that applies to your whole financial life.
What Is a Financial Planner?
Financial managers use a comprehensive approach, guiding every characteristic of their clients’ economic life cycles. They aim to build a plan encompassing budgeting, emergency savings, college funds for kids, protection needs, retirement, and estate planning.
Some financial developers sell asset or insurance creations, and some may be agents. *Financial planners offer various assistance and offerings; no national or state specialists control them. Anyone can consider themselves a financial planner and begin selecting clients.
For these reasons, looking for certified financial planners (CFPs) when evaluating financial planners is best. The CFP term is the highest expert standard in the financial planning business. A CFP expresses that a financial planner has enormous training and talent, as there are rigorous education requirements and an extended authorization exam to earn the certification. Besides, CFPs must always act as fiduciaries for their clients.
