Different Types of Advisors

People often use the terms “financial advisor” and “financial planner” interchangeably. You’ve probably also heard of a “CFP®” or a “fee-only advisor.” But what do all of these terms mean, and how can you be sure you’re hiring the right person for your needs?

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What is a Financial Advisor?

“Financial advisor” is a very broad term that encompasses many financial professionals with different titles and credentials; and is a title designed for almost anyone who’s employed to help make decisions around money. Financial advisors can be compensated in various ways, such as through commissions, fees, or a combination of both. It's important to understand how your advisor is compensated, as this may impact the recommendations they make.

Over 612,000 registered financial professionals are licensed to buy and sell investment products on behalf of their clients. While many have the title “Financial Advisor” and can offer advice, their recommendations may be influenced by their ability to earn a commission. These professionals are often referred to as a Broker.

What is a Financial Planner? Or a CFP® professional?

Financial planning involves looking at a client’s entire financial picture and advising them on how to achieve their short- and long-term financial goals. Though there are no formal requirements for being a Financial Planner, some of us hold the CERTIFIED FINANCIAL PLANNER™, or CFP® designation. There are only about 96,000 CERTIFIED FINANCIAL PLANNER™.

However, it’s important to note that the CFP® is a certification, rather than a job title. Many CFP® professionals are still affiliated with a bank, insurance company, or investment company that offers the advisor incentives for recommending certain products. These advisors may be commissioned-based or fee-based. Fee-based simply means they can earn both - fees from their clients, and broker commissions. These fee-based advisors are sometimes called “hybrid” advisors or “dually-registered.”

What is an Independent Fee-Only Advisor?

An independent fee-only advisor is compensated solely by their clients, without earning any commissions for the recommendations made. They are legally obligated to act in the best interest of their clients 100% of the time (known as a “Fiduciary”).

While not affiliated with a bank, insurance company, or investment company, a fee-only financial advisor can still assist with investments through a qualified custodian such as Charles Schwab, Fidelity, Pershing, etc. In this capacity, the financial advisor acts as your investment advisor without earning any commission for their recommendations.

What does all this mean when we work together?

I am an independent fee-only CERTIFIED FINANCIAL PLANNER™. This means that I am held to the highest ethical standards and provide transparent, unbiased advice. By working with me, you can trust that your financial well-being is my top priority, and that all of my recommendations are designed to help you reach your unique financial goals. I work only for you — not a broker, bank, or insurance company.

Let's get started.

Take the next towards your financial goals with my free Financial Health Assessment.
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