Navigating the world of wealth management can be overwhelming and time-consuming. It also requires a certain level of financial expertise when dealing with investment risks.
This is where a financial advisor comes in. Having a trusted wealth manager, such as a CERTIFIED FINANCIAL PLANNER® (CFP) or an elite team of financial advisors like Plancorp, who can navigate through the nuances of wealth management makes all the difference when managing your finances.
Financial advisors can help you reach your personal financial goals while ensuring that you're working towards a financially secure and prosperous future.
Everyone may have a general idea of what financial advisors are but have you ever wondered which kind of financial advisor might best suit your needs and goals?
Why You Need A Financial Advisor
Primarily, financial advisors are the architects of your financial blueprint. They carefully analyze your choices and are dedicated to helping you achieve a financially secure and stable future.
So, to answer the question: "What is a financial advisor for?" It generally boils down to your financial needs. Whether you’re just starting out or planning to retire, financial advisors offer the best insights, whether it’s creating specialized and personalized long-term strategies, solving problems on estate planning, tax minimization, maximizing the use of your assets, and even managing general wealth.
The Different Types of Financial Advisors
There is no one-size-fits-all financial advisor. If you're wondering about what type of financial advisor best suits your financial needs or how many types of financial advisors are there, remember that all wealth managers are unique.
So, there's no single answer to the question: "What is a financial advisor called?" This calls for unique circumstances and financial objectives, which require different types of methods and knowledge.
To know which type of financial advisor best suits your financial goals, we've curated a list of the eight key categories of financial advisors. Each type brings different skills and expertise to the table while catering to various aspects of your financial journey.
Robo-Advisor
Leveraging advanced technology and algorithms, robo-advisors optimize investment management and deliver tailored guidance according to your risk tolerance and goals. They serve as a low-cost choice for investors with basic needs.
Financial Coach
Acting as your mentors and motivators, financial coaches help you cultivate the wisdom and skills needed for effective financial management. They offer literary training and support to guide you in making informed financial decisions.
Registered Representative
Registered representatives, also known as stockbrokers, are frequently connected to broker-dealers, making it simpler for you to buy and sell securities while following the regulations set forth by the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA).
As transaction mediators, a broker's primary function is to support trading activities with your financial items. They may also offer guidance on your potential investments and how you can best approach them depending on current market trends.
Financial Consultant
Financial consultants offer financial advice, including tax planning, insurance, investment choice, and tailored financial success plans. Similar to other advisor types, the main difference is that you may work with a consultant on a single project like researching an investment opportunity or to develop a one-time plan.
Asset/Portfolio/Investment Advisor
With a primary focus on portfolio construction and risk management, investment advisors strive for optimal returns. Their services cover investment advice, market analysis, diversification, and perhaps investment decision-making, which includes managing mutual funds.
One thing to consider before only employing an investment advisor is that those managing your portfolio may or may not have an understanding of the life goals you are trying to fund. For this reason, it can be helpful to consider a financial planner or wealth manager who can connect that context into your investment strategy.
Financial Planner or Advisor
Financial planners who possess certifications, like CFP (CERTIFIED FINANCIAL PLANNER® from the CFP® board) and other related professional designations, guide clients toward a secure financial future by developing multi-faceted financial plans.
You'll be able to discuss and plan for retirement, college savings, estate management, life insurance options, tax strategies, and cash flow with a financial planner based on standardized processes.
Wealth Manager
Specializing in tailored financial management for high net worth individuals, wealth managers offer holistic advice. They go beyond planning and offer comprehensive wealth management as a whole, such as investment management, tax strategies, philanthropic guidance, and estate planning services.
A key difference between an advisor and a wealth manager is their proactivity. They will always be looking ahead to what your best next step is, whereas an advisor might be more reactive to your questions and concerns.
The Best Type of Financial Advisor
When considering a CERTIFIED FINANCIAL PLANNER® (CFP) or any other type of potential advisor, it is important to assess whether they operate as a fiduciary and adhere to a fee-only compensation for unbiased advice.
Fiduciary advisors are legally obligated to manage your finances with your best interests in mind. Additionally, choosing should also depend on their ability to provide investment strategies tailored to your financial needs, status, and preferences.
It is essential to evaluate your situation first, taking into account the size of your assets and the complexity of your goals. Consider your comfort level when working with a financial professional. Lastly, always keep your budget in mind. Financial advisors charge varying fees, so it’s important to find one that best suits your budget.
You should always be committed to building a successful advisor-client relationship. For more information regarding your financial advisor’s professional designations, expertise in portfolio management, fiduciary status, certifications, and adherence to SEC and FINRA regulations, you may consider using tools such as BrokerCheck.
Having the proper financial advisor on your side can help pave the way toward your financial success, whether your goals are to retire comfortably, invest wisely, or plan the future of your family. It's not only crucial to answer the question: "What are the different types of financial advisors are there?" but also this: "What type of financial advisor do I need?"
The good news is, when looking for a certified financial planner or any of the financial planner types, Plancorp is here to help you reach your goals, providing financial planning services and comprehensive wealth management catered to your particular situation while taking into account your best interests.
Partner with an Elite Team
Take charge of your financial destiny by being aware of the types of financial advisors. Armed with this knowledge, you'll soon be able to make smarter choices, leading you toward your financial goals. Always remember working with a financial advisor is like having a partner for your financial life. You can comfortably negotiate the complexity of your personal finances with the proper counsel by your side.
If you want more comprehensive insights on selecting the right wealth manager for your needs, check out Plancorp's guide on interviewing financial advisors.
