Insights + Resources

Investment Professionals and Advisors

Jun 12, 2023

Free Man Looking At A Screen With Stock Market Data Stock PhotoA wealth of investment information is available if you want to do your own research before making investment decisions. However, many people aren’t comfortable sifting through balance sheets, profit-and-loss statements, and performance reports. Others just don’t have the time, energy, or desire to do the kind of thorough analysis that marks a smart investor.

For these people, an investment advisor or professional can be invaluable. Investment advisors and professionals generally fall into three groups: stockbrokers, professional money managers, and financial planners. In choosing a financial professional, consider his or her legal responsibilities in selecting securities for you, how the individual or firm is compensated for its services, and whether an individual’s qualifications and experience are well suited to your needs. Ask friends, family, and coworkers if they can recommend professionals whom they have used and worked with well. Ask for references and check with local and federal regulatory agencies to find out whether there have been any customer complaints or disciplinary actions against an individual in the past. Consider how well an individual listens to your goals, objectives, and concerns.

Stockbrokers

Stockbrokers work for brokerage houses, generally on commission. Though any investment recommendations they make are required by the SEC to be suitable for you as an investor, a broker may or may not be able to put together an overall financial plan for you, depending on his or her training and accreditation. Verify that an individual broker has the requisite skill and knowledge to assist you in your investment decisions.

Professional money managers

Professional money managers were once available only for extremely high net-worth individuals. But that has changed a bit now that competition for investment dollars has grown so much, due in part to the proliferation of discount brokers on the Internet. Now, many professional money managers have considerably lowered their initial investment requirements in an effort to attract more clients.

A professional money manager designs an investment portfolio tailored to the client’s investment objectives. Fees are usually based on a sliding scale as a percentage of assets under management — the more in the account, the lower the percentage you are charged. Management fees and expenses can vary widely among managers, and all fees and charges should be fully disclosed.

Financial planners

A financial planner can help you set financial goals and develop and help implement an appropriate financial plan that manages all aspects of your financial picture, including investing, retirement planning, estate planning, and protection planning. Ideally, a financial planner looks at your finances as an interrelated whole. Because anyone can call himself or herself a financial planner without being educated or licensed in the area, you should choose a financial planner carefully. Make sure you understand the kind of services the planner will provide you and what his or her qualifications are. Look for a financial planner with one or more of the following credentials:

  • CERTIFIED FINANCIAL PLANNER™(CFP®)
  • Chartered Financial Consultant® (ChFC®) and Chartered Life Underwriter® (CLU®)
  • Accredited Personal Financial Specialist (PFS)
  • Registered Financial Consultant® (RFC®)
  • Registered Investment Advisor (RIA)

Financial planners can be either fee based or commission based, so make sure you understand how a planner is compensated. As with any financial professional, it’s your responsibility to ensure that the person you’re considering is a good fit for you and your objectives.

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