If you’re looking for some help managing your money, you might turn to a financial adviser.
That’s someone who advises you on your finances … right?
Sort of. “‘Financial adviser’ is a generic term with no precise industry definition, and many different types of financial professionals fall into this general category,” Investopedia explains.
“Stockbrokers, insurance agents, tax preparers, investment managers and financial planners are all members of this group. Estate planners and bankers may also fall under this umbrella.”
“It’s unbelievable the scope or range of people that can consider themselves financial advisers or financial planners,” Bob Gavlak, CFP and wealth adviser with Strategic Wealth Partners in Columbus, Ohio, told Business Insider. “The majority of time, if somebody calls themselves a financial adviser, usually all that means is that they’re investment advisers — all they do is investment management.”
Gavlak says a financial adviser might not have the training to help you with taxes, insurance, investments, and estate planning.
On the other hand, you have the Certified Financial Planner (CFP). While it sounds similar to “financial adviser,” it’s not quite the same. “A lot of times people will look at financial advisers and certified financial planners and they think that they’re all the same, but that would be like looking at a restaurant and saying McDonald’s is the same as some really fancy steakhouse,” says Gavlak.
Certified financial planners have to be certified by the Certified Financial Planner Board of Standards, Inc., which is why you’ll often see a registered mark after their designation (CFP®).
To become certified, they have to complete what the board calls the four Es: education, examination, experience, and ethics. These planners are certified to advise on everything from taxes to insurance to estate planning, and are required to complete ongoing continued education requirements. One of the hallmarks of a CFP is that they have fiduciary responsibility when working on financial planning, which means they have to act in their clients’ best interest.
The CFP board keeps track of everyone certified through its program, which makes it simple to do a little homework on a professional before signing on the dotted line.
This isn’t at all to say that a financial adviser wouldn’t be able to help with your money. Instead, as a prospective client, it would be smart to identify what you need from your financial adviser before you sign on. Is it insurance? Is it a financial plan? Is it solely investment advice?
No matter their title, ask about your prospective adviser’s expertise and experience up front to make sure their specialty aligns with your needs.