Defining Financial Service Professionals
Updated on Aug 17 2018
Trying to make sense of all the different financial service professionals and their areas of expertise can be confusing. Financial advisor, financial planner, accountant, investment advisor and stockbroker are just a few of the experts in the finance industry; so how do you know which one is right for you and your financial need?
List of Financial Services and Professionals
Read below to get a basic synopsis of each financial specialty so you can discern who to contact for help with annual taxes, retirement planning, estate planning and more.
“Financial advisor” is a broad term that is generally used to refer to most any professional advising you on your finances. The exact title and certifications of the potential financial professional will tell you their background and expertise – so make sure to do your homework as you don’t want to hire the wrong professional for the service you need.
A fiduciary is a person or organization that provides duties of good faith and trust to a person or business. Providing the highest legal duty of one party to another, being a fiduciary also involves being bound ethically to act in the other’s best interests. A fiduciary might be responsible for general well-being, but often it involves finances managing the assets of another person, or of a group of people. Money managers, bankers, accountants, executors, board members and corporate officers can all be considered fiduciaries as their responsibilities or duties are both ethical and legal.
Certified Financial Planner (CFP)
A Certified Financial Planner (CFP) specializes in helping clients develop a financial plan encompassing all areas of finance, including savings, taxes, retirement, inheritance and college funds. They also help clients work out how they can achieve their short-term and long-term financial goals . They have to be certified by the Visit Certified Financial Planner Board of Standards, Inc., which is why you’ll often see a registered mark after their designation (CFP®). They generally charge a fee for their advice or charge a percentage for all their assets under management.
Chartered Financial Analyst (CFA)
A Chartered Financial Analyst (CFA) is a professional who is required to pass three levels of exams covering areas such as accounting, economics, ethics, money management and security analysis. The title is a designation given by the Visit CFA Institute that measures the competence and integrity of financial analysts. CFAs need to also meet requirements such as qualified work experience, passing industry exams, paying annual dues and signing off annually on Code of Ethics and Standards of Professional Conduct.
Financial analysts evaluate investment opportunities. They work in banks, pension funds, mutual funds, securities firms, insurance companies, and other businesses. Financial analysts are also called ‘securities analysts’ and ‘investment analysts’ and are usually available if you work with specific institutions that offer their services.
Wealth managers are high-level financial service professionals who combine financial and investment advice, accounting and tax services, retirement planning and legal or estate planning. They typically work with high-net-worth clients. Private wealth managers are usually close to their clients and act as a custodian of their money. Make sure to check reviews and training before hiring a wealth manager as you need someone who is not only qualified to do the job; but also, someone you can trust.
Registered Investment Advisor (RIA)
Registered Investment Advisors offer a comprehensive set of services, including investment and planning guidance instead of selling financial products. They specialize in all kinds of securities and have a fiduciary responsibility to see that investments are appropriate for each individual client. They are defined by the Investment Advisers Act of 1940, as “any person or group that makes investment recommendations or conducts securities analysis in return for a fee, whether through direct management of client assets or via written publications.” Investment Advisors can offer a one-time investment advice service or work work with individuals or families for many years. Their fees depend on the duration and type of services they perform.
Certified Public Accountant (CPA)
Certified Public Accountant (CPA) is a designation given by the American Institute of Certified Public Accountants to those who pass an exam and meet work experience requirements. CPAs are required to get a bachelor’s degree in business administration, finance or accounting and have to keep up with continuing education credits to keep their state license. CPAs can help with tax and financial planning, financial consulting, assurance services and accounting services.
Certified Fund Specialist (CFS)
A Certified Fund Specialist (CFS) receives certification from the Institute of Business and Finance (IBF) for their expertise in mutual funds and the mutual fund industry and continuing education every two years is needed to maintain certification. The CFS certification is often obtained by personal financial advisors, accountants, bankers, brokers, money managers and Certified Financial Planners.
A broker purchases financial products on behalf of another for a commission. Brokers sell specific products offered by their brokerage firm for a fee, and each investment is a distinct transaction for which they receive payments. Some brokers offer financial consultation and advice, but they relationship between clients is mostly transaction-based.
Determining the Financial Professional That’s Right for You
The public remains confused and sometimes underserved when it comes to determining the differences between financial professionals and their fiduciary responsibility. If you’ve decided to see a financial advisor, it’s important to do your due-diligence to make sure you choose a financial professional who is right for your unique situation. Research your prospects certifications and areas of expertise and find out their compensation method. Ask the potential advisor questions to learn whether they are a good fit for your financial need.