Finding A Financial Advisor
Many of us could use a hand managing our money. Financial advisors can provide valuable guidance, helping give you confidence and direction to navigate financial decisions. But did you know that there are several types of financial advisors? Here we’ll discuss the kinds of advisors you may need, the services they offer, and what sort of skills and attributes to look out for from your trusted advisor.
What Does a Financial Advisor Do?
While there are different types of financial advisors, their goals are ultimately the same. They assess your financial wellness, figure out how to meet your goals, and teach you along the way. When you first meet with a financial advisor, you’ll probably have to take a financial questionnaire. Don’t worry – this isn’t a pop quiz! It’s meant to help the advisor understand your present financial situation compared to where you want to be. You’ll answer questions about your current debts and assets. You’ll also talk about how much risk you’re willing to take on when you invest. This helps your advisor understand your finances better.
Once they know what you’re working with, your advisor can help you with planning. Maybe you’re saving up for a summer home. Maybe you’re trying to get out of debt. Whatever your goals, an advisor can lay out a road map to help you get there.
This is also where the “education” portion comes in. A good advisor will turn your financial goals from a vague, imaginary dream into something concrete and attainable. They will teach you what specific steps are involved for reaching your goals, and they’ll teach you how to act on those steps. Ideally, they’ll also be sharing their knowledge with you as they work with you. That may mean basics about saving and budgeting, or it may mean complicated investment and tax strategies. It all depends on where you are and what your level of knowledge is.
What Kinds of Advisors Are There?
While all advisors are there to help you manage your money, different advisors have different specialties, and different priorities. Here are a few that you may encounter:
- Certified Financial Planners, or CFPs, go through rigorous education and certification. This prepares them to help you make all sorts of financial decisions. You’ll probably see people with this certification call themselves financial planners, financial advisors, or wealth managers. These advisors help you manage your money holistically. They can help you with everything from budgeting to investing to retirement planning.
- Chartered Financial Analysts, or CFAs, are easy to mix up with CFPs. But as their name suggests, CFAs focus more on analytics. They can help with portfolio management, among other things. Some of them go to work directly for companies as analysts instead.
- Certified Public Accountants, or CPAs, focus on tax preparation. This is one type of financial advisor that many people are familiar with, even if the phrase “financial advisor” isn’t one we usually associate with them. Everyone can use a little help at tax time.
- Investment Advisor Representatives, or IARs, are registered with the SEC or with state regulators. As the name suggests, they focus on investment portfolios by default, but some may offer a broader range of services. They are also required to act as fiduciaries. (We’ll get into what that means below.)
- Chartered Life Underwriters, or CLUs, focus on life insurance, business planning, and estate planning services. This is an important aspect of a financial portfolio, and some CFPs will also become CLUs to offer a broader spectrum of services.
One thing you may want to consider when choosing an advisor is whether they are a fiduciary. This term may sound complicated, but fiduciary advisement is actually a simple concept. A fiduciary is a person legally required to act in the best interest of their client.
A fiduciary’s responsibilities are both ethical and legal. Instead of just selling you a product, they must consider all the costs, impacts, and options to determine the best decision for you. They are tasked by law with providing the highest standard of care to their clients. That means managing assets for your benefit – not their own profit. In fact, they cannot personally benefit from the management of your assets.
Not all advisors meet this description. IARs are required to act as fiduciaries, while stock brokers aren’t. But both types of individuals could help you learn more about including stock investments as part of your financial plan.
While fiduciaries provide their clients with a valuable service and trustworthy relationship, they may not be the only type of advisor you’ll ever want.
Finding Professionals You Can Trust
There’s a certain wisdom in assembling a small collection of people that you trust. You may want an investment advisor representative or financial planner who can help you set and meet your goals. Or, you may be looking for a broker who can help you with your investment portfolio. An accountant can help with your taxes, while a CLU can help you with your insurance decisions.
Make sure to do your research about the advisor you choose. For example, the Securities and Exchange Commission has a database of registered investment advisor firms. You can search this database to research your advisor’s firm and help ensure they’re legitimate.
Mutual of Omaha’s network of advisors are equipped to provide a wide range of financial planning advice. Your advisor is here to get to know you personally, and to care about and for you as you navigate the world of finances. When they don’t have answers right away, they have other people that they can call on who have the training and certifications necessary to help you make the best decisions for you.
If you’d like to learn more about the capabilities of our financial network, feel free to call at any time.
Mutual of Omaha and its representatives do not provide tax and legal advice, and the information provided herein is general in nature and should not be considered tax and legal advice. Consult a qualified professional regarding your specific situation.
Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.