A guide to using 6 types of financial advisors to help achieve your goals.
Financial Advisor #2: Banker
A banker is a representative of a banking institution and he or she offers different services depending on the type of bank that they work for. For example, a commercial banker can help you get a business loan and open up appropriate accounts for your small business. A personal banker can help you utilize accounts that earn the most interest, purchase a CD, or open up an IRA. A mortgage banker can evaluate your finances to see if youqualify for a home loan. Most banking services are free to existing customers or to potential new customers, so never be shy about asking a banker for help.
Financial Advisor #3: Insurance Agent
Financial advisors are for everyone—not just the rich and famous.
You might not think of an insurance agent as a financial advisor, but they play an important role in helping you protect your wealth. They’re licensed and regulated at the state level to sell policies for large insurers. Most agents work on commission but will consult with you about your insurance needs free of charge. It’s a good idea to meet with your insurance agent at least once a year to review your policies. Ask them lots of questions so you understand exactly what your insurance covers and what it doesn’t. Having too little insurance is risky, but being over insured can be expensive. A good insurance agent will help you find the sweet spot where you have affordable coverage that minimizes your exposure to financial risk.
Financial Advisor #4: Registered Investment Advisor (RIA)
A Registered Investment Advisor is a special type of broker—that’s a professional who’s licensed to buy and sell securities, like stocks and mutual funds. A broker has to recommend “suitable” investments for clients, but an RIA is held to a higher fiduciary standard. An RIA must put their clients’ interests first by making sure that the investments youbuy and sell are consistent with your financial goals and long-term objectives.
A Registered Investment Advisor manages your portfolio and typically gets paid a percentage of your assets under management, rather than a commission on individual transactions (like a regular broker does). That gives an RIA a strong incentive to recommend profitable investments that are likely to make your portfoliogrow over time. Both brokers and RIAs are regulated by state and federal authorities. You can do a background check on these professionals at finra.org, the Web site for theFinancial Industry Regulatory Authority. You can also check up on RIAs on the SEC Web site at adviserinfo.sec.gov.