Investment Consultant Vs Financial Advisor

Credentials To Look Out For

So, how do you know if a financial advisor or planner is “real?” One that has credentials might hold several licenses and designations, and the most common is Certified Financial Planner . “Many people see CFP as the gold standard,” says Schweiss. “A lot of advisors say it gives them more credibility with clients.”

Other licenses to look out for include Chartered Financial Analyst , Chartered Financial Consultant® and Certified Investment Management Analyst® . Stephanie Mackara, principal wealth advisor at Charleston Investment Advisors, would add a registered investment advisor to this list as well, as they are obligated to provide advice to investors that is “uniquely aligned with the investor’s financial goals and needs,” Mackara says.

How To Find An Investment Advisor And Financial Planner

When looking for a financial planner or investment advisor, you should narrow your search down to licensed planners and fiduciary investment advisors. You should also look online to see which firms and financial planners are the closest to you.

CFPs are normally the safest option when it comes to financial planners. This is mainly because of the rigorous coursework, exams and experience required for such a certification. These planners must also work a minimum of three years in financial planning before they can pursue a CFP certification.

If youre having trouble finding an advisor, try using SmartAssets free financial advisor matching tool. Youll be paired with up to three financial advisors in your area, with an opportunity to interview each and see if theyre a good fit. When speaking with potential advisors, there are some specific questions you should ask.

Pay For Open Positions

Job listing sites may post open positions using either term. Indeed.com, for instance, displays both financial consultant and financial advisor openings. The two job titles also have a similar base pay, with advisors averaging $74,987 base salary and consultants bringing in $78,505 on average. However, consultants also average another $20,000 in commissions, according to the job posting site. This may not be a true apples-to-oranges comparison as many financial advisors work in their own businesses and those salaries dont get posted.

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When Should You Use A Financial Advisor

Financial advisors are a good option when:

• You have a large investment portfolio to manage. Managing a seven-figure portfolio can easily turn into a part-time job. You may want to turn the job over to a financial advisor.

• You have a demanding career, a large portfolio, and no time to manage it. A financial advisor can provide comprehensive financial management, using your input as a guide.

• Youre inexperienced when it comes to investing. Many successful professionals and business owners are good at making money, but know little about investing it. A financial advisor can fill that void.

• You have a need for comprehensive financial services, like retirement planning, estate planning, and tax planning.

• You want to talk with a professional about your choices and strategy.

Financial Vs Investment Advisor: Whats The Difference

Titles do matterand in the financial services world, so many titles exist that can and do mean very different things for you, the consumer. The terms financial advisor and investment advisor are often used interchangeably, but there are crucial differences between the two. Throw in financial planner, and it can get a whole lot more confusing. Many of the differences come down to the language used in their titles, who regulates each designated body, and the standards they are held to.

The landmark Investment Adviser Act of 1940 outlined regulations for investment advisers, including requiring registration with the SEC and complying with regulations designed to protect investors. According to Kitces.com, Congress also included in the Advisers Act under Section 208 a requirement that it wasnt even permissible to use the investment counselor title, or to represent as an investment counsel, without actually being principally in the business of providing such advice services . In other words, advisors werent permitted to advertise that they were advisors unless they agreed to be regulated as advisors.

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The Role Of Investment Managers

Investment managers may vary from one- or two-person shops to multi-national conglomerates with offices in multiple countries. The fees that investment managers charge their customers are usually calculated as a percentage of the clients assets under management.

For example, an investor with a $5 million inventory who pays a 1.5 percent yearly fee to an investment manager would spend $75,000 in fees every year.

According to research, BlackRock Inc., the Vanguard Group, State Street Global Advisors, and Fidelity Investments were the four biggest investment management organizations in the world as of 2020, with $7.4 trillion, $6.2 trillion, $3.1 trillion, and $3 trillion, respectively.

How Do Investment Advisors And Financial Planners Make Money

Using a financial advisor or planner can be very beneficial but getting access to their expertise can come with some confusing costs. Its important to know what youre paying for their services before starting the relationship. Financial advisors typically earn money through one of two fee structures:

• Fee-only: These advisors charge a flat or asset-based rate for their services. This is their only method of compensation.
• Fee-based: Conversely, these advisors simultaneously charge clients standard fees and earn commissions from the sale of financial products. These products can include the sale of securities or insurance policies.

Dont forget that, despite the differences above, both fee-based and fee-only advisors act as fiduciaries. That means all SEC-registered advisors, regardless of how they make their money, are bound by law to act in your best interest.

Commission-based investment advisors earn commissions from investment transactions with clients. While fee-based advisors have a fiduciary duty to their clients, commission-based advisors do not.

This is similar for financial planners. Those who provide financial advice for clients and manage investments have a fiduciary duty. But those who are commission-based must follow a suitability rule, which means that the products they sell have to align with client interests this, however, may not always serve them first.

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Financial Advisors Vs Robo Advisors

In recent years, several software programs have been developed to make investing easy for consumers. These are usually referred to as Robo advisors.

Many investors are choosing to go with such programs in lieu of hiring a financial advisor. The problem with using these programs is you lose that human touch.

Plus, the advice cant possibly be as personalized as tailored or personalized as what you would get from your own financial advisor.

Can you discuss a special needs child with an online app, for example?

Or can you discuss aging parent needs with an online app?

Can you work through investing with too much risk, or too little risk?

The answer is no you cannot do these things with a Robo advisor.

Plus, are you more likely to stick to your investment plan if you work with a financial advisor, or if you use an online app? I think most everyone would agree that working with a human holds us more accountable, assuming you have built a good relationship with your advisor, and you work together closely to reach your wealth goals.

Would the average financial advisor fees outlined in the chart below be worth it for you? Only you can decide.

How Do Cfps Work For You

Like investment advisors, CFPs have a fiduciary responsibility to their clients. They must recommend financial products or plans that are best for the client they cant recommend products simply because they would benefit themselves financially.

Many CFPs are fee-only, meaning youll pay a rate for their services but they wont profit off any of the recommendations they provide you. Others are fee-based, so they might earn a commission based on certain recommendations. Even these CFPs, however, cannot recommend a product over another simply because it would net them a higher commission. Still, many CFPs believe that fee-based pay structures can influence their recommendations, so they opt for fee-only payments.

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Questions To Ask A Financial Advisor

In your first meeting with a financial advisor, make sure you learn the answers to these questions and that youre comfortable with their responses.

• Are you a fiduciary?
• Are you always acting as a fiduciary?
• How do you make your money?
• What is your approach to financial planning?
• What financial planning services do you offer?
• What kind of clients do you normally work with?
• Do you have any account minimums?
• Do you have any conflicts of interest in managing my money?
• What information do I need to bring for you to look at when developing my financial plan?
• How many times and how often will we meet?
• Will you collaborate with my other advisors, like CPAs or attorneys?

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Defining Financial Adviser Vs Advisor

If you look up adviser, frankly spelled either way, adviser with an E-R or advisor with an O-R, in the dictionary you get a definition of “someone who advises.” A person who engages in the act of advising, who is giving a recommendation or a suggestion.

Note the root there. An adviser is someone who advises. So the natural noun version becomes adviser with an E-R at the end. Because advise is spelled with an E at the end.? The word is not adviso , it’s advise .

If you actually look up adviser on Merriam-Webster, the original etymology of the word comes from a French word aviser, A-V-I-S-E-R, and the root word there is the French word for “opinion”. So aviser in French became adviser or the act of advising in the British English, which became an adviser where we simply took the word advise and added an R onto the end to make it a noun.

Though I suspect that actually, the other reason why we’ve seen a shift is that one of the distinctions we do make is that “to advise” is the verb of giving someone recommendations and suggestions, while “advice” itself is the noun. We actually have different spellings between the verb to advise for the act of advising, and the noun for the advice itself that was given.

Should I Work With An Investment Advisor Or A Financial Planner

Financial planners provide clients with advice aimed at helping them enhance their wealth and plan for the future. Some have the certified financial planner certification, while others hold the chartered financial consultant certification. The services financial planners aid their clients with could include retirement planning, estate planning, investment or insurance planning.

As their name indicates, investment advisors focus on investing and the creation of investment portfolios. While financial planners often engage in investing to a certain degree, advisors take things a step further. This difference shows itself in the form of strategy creation, diversification and asset allocation planning. All investment advisors must have a Series 65 license.

The type of investment advisor or financial planner you choose depends solely on your goals. If you want to create a stronger portfolio, an investment advisor who is a fiduciary might be useful.

If improving your overall financial situation is of more importance to you, a financial planner might be the better option. Similar to investment advisors, financial planners come in fee-based, fee-only and commission-based variations.

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What Is Their Fee Structure

Before entering into an agreement with a financial advisor, review their fee structure. The most common types of payments are fee-only, fee-based and commission-based.

• Fee-Only: A fee-only advisor charges a flat fee, hourly rate or percentage of the assets they manage for you for their services. The fee-only structure is preferred by many CFPs.
• Fee-Based: Fee-based payments are a mix of commissions and fees. Youll pay a base fee, but you might also pay a commission on investment trades or other financial products.
• Commission-Based: With a commission-based structure, the financial advisor makes a commission based on the financial products they sell you. This doesnt necessarily mean the products they sell you arent the best products for you, simply that they dont have to be.

Find A Financial Adviser

Once you know what you want, find an adviser who offers the right services for you.

You can find a licensed financial adviser through:

• a financial advice professional association
• your super fund
• your lender or financial institution
• recommendations from people you know

Search by postcode on the Financial advisers register to find a licensed adviser near you.

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Consultants Vs Advisors The Certifications

Whether you are a Financial Advisor or a Financial Consultant, you will need the same certifications to conduct your business with clients.

The first step for both is earning the Certified Financial Planner certification and the Chartered Financial Consultant certification.

For these professionals to earn the CFP designation, they must have three years of work experience and complete an education program requiring them to pass the certification exam.

Maintaining these certifications by both clients requires them to meet the continuing education requirements and abide by the CFP Boards code of ethics.

It is also a major requirement that Certified Financial Planners become fiduciaries.

This means that they pledge to act in the clients best interest always.

As for the ChFC candidates, nine courses must be taken that focus on retirement planning, insurance, estate planning, income taxes, and investments for successful earning this certification.

Seven of these courses are also part of the CFP certification program, making it easier for advisors and consultants to earn both certifications simultaneously.

There are other certifications for both Financial Consultants and Financial Advisors, and they are as follows:

Some Financial Advisors also go that extra mile to get Financial Industry Regulatory Authority licenses.

However, not all financial firms make it mandatory for their Advisors and Consultant to obtain FINRA licenses.

Tips For Financial Planning

• Whether you wind up with someone calling themselves a financial advisor or a financial consultant, professional assistance in making financial decisions can help you reach your goals. Finding a financial advisor doesnt have to be hard. SmartAssets free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
• In addition to a financial advisor and financial counselor, other similar job titles include wealth manager, investment manager and financial planner. While each of these may provide somewhat different services, the differences are not clearly spelled out or universally followed. Ultimately, the only way to find out what a given financial professional can do for you may be to ask for details.

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Investment Advisors Vs Financial Planners

Both investment advisors and financial planners are alike in that they help you with managing your assets, but the services they provide also differ in some notable ways. The table below breaks down some key differences between these two financial professionals:

Is It Possible For Anyone To Work As An Investment Advisor

Yes. One of the essential qualities of a profession as a financial adviser is that it is accessible to almost everyone. Only a few financial adviser qualifications must get met: A bachelors degree in any field is required. Your company or selected professional path will generally decide the appropriate industry licenses or certifications.

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Investment Banker Vs M& A Advisor Vs Business Brokerreasons To Hire An Investment Banker

Hiring the right team is one of the most important decisions you will make when considering the sale of a company, especially for owners of businesses in the low to middle market. There are many options and so many groups that make the decision confusing when evaluating what type of advisor you need or who will really serve your interest best. The low to middle market market is serviced by many deal makers that include: M& A advisors, business brokers, and investment bankers. There are several factors you should consider and clearly understand the differences between these merger & acquisition professionals.

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Investment Advisor Vs Financial Advisor: There Is A Difference

While investment advisors and financial advisors may walk the same and quack the same, they are not the same duck. The Financial Industry Regulatory Authority and the Securities Exchange Commission have clearly defined investment advisors as distinct from financial advisors.

The term financial advisor is a generic one that can encompass many different financial professionals, although it most commonly refers to brokers . Investment advisor, on the other hand, is a legal term and thus has a more clear-cut definition — or at least as clear as legalese is apt to be.

Investment Advisor vs Financial Advisor

What Is an Investment Advisor?

The SEC has a three-prong definition of an investment advisor. It states that to be an investment advisor, you must: for compensation, be engaged in the business of, providing advice or issuing reports on individual securities.

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