A guide to using 6 types of financial advisors to help achieve your goals.
Financial Advisor #5: Financial Planner
A financial planner analyzes clients’ needs based on their long-term goals. They can create a comprehensive plan or focus on specific issues like investments, insurance, or estate planning. The financial planning industry isn’t regulated which means there’s a lot of disparity in qualifications and business practices. There are about 100 different designations that are designed to convey planning expertise. However, many of these designations are irrelevant and lack professional credibility. The most common designation is Certified Financial Planner or CFP because these advisors must pass a comprehensive exam and have a certain amount of experience.Visit cfp.net, the Certified Financial Planner Website to find a professional with this designation.
Financial planners are paid in several different ways, including commission-only, fee-only, salary, or a combination of these methods. In general, you’ll receive more objective advice from a fee-only planner who doesn’t have an incentive to steer you toward a particular investment or insurance product. The only downside is that the fee you pay a fee-only planner might be higher than what you’d pay to a commission-based planner. Financial planners typically work with you in person, but also may be able to consult with you over the phone.
Financial Advisor #6: Financial Coach
A financial coach partners with clients to help them establish and accomplish specific goals. The coaching industry isn’t regulated and has a wide range of practitioners who focus on various issues. A qualified coach has broad knowledge of their specific field, as well as an ability to inspire you to take action. Financial coaches dig into the details of your existing situation—both financially and personally—to discover what’s holding you back from building wealth.Coaches can be used for a specific purpose—like navigating through a home purchase, creating and sticking to a budget, combining finances with a life partner, getting rid of debt, or choosing employee benefits—or they can be used for general knowledge and motivation. Coaches make recommendations and offer personalized support that allows you to form positive habits and make steady progress toward your financial goals.Financial coaches might work with you in person, over the phone, by e-mail, or by a combination of these methods. They’re typically paid per session or charge a flat rate for a series of consultations.
How to Find a Financial Advisor
Navigating the world of personal finance can be challenging and even a bit frustrating at times. It’s important to make smart, objective financial decisions, rather than emotional ones—and having the right financial advisor can help you do that. Word of mouth is a great way to find good advisors, so be sure to ask your co-workers, friends, and family for their recommendations.
A final quick and dirty tip is that in many cases, when you have a significant life event such as getting married or divorced, coping with the death of a spouse, having children, buying a home, buying or selling a business, receiving an inheritance, or changing careers, it’s time to seek the help of financial advisors.
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