Understanding Financial Advisor Titles

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on August 10, 2023

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A financial advisor is a professional that helps individuals or businesses achieve their personal financial goals by providing guidance. Their job is to help people manage their money, with the ultimate goal of optimizing wealth over time.

Financial advisors provide guidance to clients, usually on a fee basis. Generally, a client comes to a financial advisor with an issue involving the client's finances.

For example, when there is major life change such as buying or selling of real estate property, planning for retirement, education planning for children and so on. The client may need help in managing his or her assets in order to meet future goals.

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Importance of a Financial Advisor

A financial advisor is important because they can help individuals and families make informed choices about their money.

Advisors have the training and experience to assess a client's situation and recommend appropriate courses of action.

Advisors can help clients save money, invest for the future, and avoid costly mistakes.

Types of Financial Advisors

There are several types of financial advisors according to the title. These include the following:

Certified Public Accountants

CPAs are licensed by the state in which they work and must pass an exam in order to become certified. They specialize in accounting and tax planning.

CPAs may also offer financial planning services, but they are not required to do so.

Certified Financial Planners

CFPs are certified by the Certified Financial Planner Board of Standards, Inc. They specialize in comprehensive financial planning, which includes investment planning, retirement planning, tax planning, and estate planning.

Registered Investment Advisors

RIAs are licensed by the Securities and Exchange Commission (SEC) and must meet certain requirements in order to be registered. They specialize in investment planning and portfolio management.

RIAs must act in the best interests of their clients, which is called a fiduciary duty.

Chartered Financial Analyst

CFA is a member of the CFA Institute. They specialize in investment planning, particularly for portfolios that include investments other than stocks and bonds. They also provide asset management services for clients with large sums of investable assets.

Chartered Life Underwriter

They specialize in life insurance planning and risk management for businesses. CLUs may also offer investment and retirement planning services depending on their education and licensing requirements.

Chartered Mutual Fund Counselor

CMFCs are advisors who have been closely examined on their knowledge of mutual funds. They help clients choose a portfolio of mutual funds based on the client's needs and objectives.

Financial Risk Manager

They specialize in risk management for businesses. FRMs are licensed by the insurance industry and have extensive training in derivatives, options, hedging strategies, swaps, futures contracts, credit risk analysis and other complex financial instruments.

Wealth Manager

They specialize in providing financial planning and investment management services to high-net-worth clients.

How to Choose a Financial Advisor

Choosing a financial advisor can be difficult, especially since there are so many types of advisors with various specialties. Before choosing an advisor, identify your needs and then select an advisor that meets those needs.

Here are some tips when selecting a financial advisor:

Check on their licenses and registrations.

Make sure the professional you choose has been properly licensed and registered. It is important to verify that they have passed required examinations in order to do their job legally.

Find out if the professional is trustworthy.

There should not be any hidden fees, and he or she should fully disclose all costs and commissions associated with their services. Regardless of what kind of service agreement you sign, make sure it states clearly how much money you will be paying the advisor.

Get a referral from someone you trust.

If you don't know where to start, ask family and friends if they have a financial advisor they recommend.

Review their disciplinary history.

Advisors may be subject to disciplinary action by their state licensure board or the SEC. You can check with these agencies to see if any complaints have been filed against them.

Talk to other professionals in the industry.

If you are thinking about hiring an advisor to help with investments, talk to an accountant, attorney or estate planner to get their opinion on the best person for the job.

Look at their fees.

Advisors typically charge by the hour, by the amount of assets they manage, or a combination of the two.

Understand their investment philosophy.

Make sure that you are on the same page with your advisor about your risk tolerance and investment goals. It is essential to realize the value of the services provided by financial advisors.

If you're thinking about hiring one, read this article to learn how to ask better questions and choose the right advisor for you: Financial Advisor Fees

Final Thoughts

Financial advisors can provide valuable services when it comes to financial planning and investment management.

By taking the time to research and interview different professionals, you can find an advisor who is a good fit for your needs.

Understanding Financial Advisor Titles FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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