Making sense of these titles and other tips on choosing a financial professional
Professionals at Ballast Advisors, LLC delineate differences between financial professional terms and designations to help empower your choices around personal financial planning, retirement planning, and more.
Originally Published Dec 2018.
What is the difference between a financial planner and financial advisor? What about a wealth advisor? Is this just semantics on a business card, or are there actual certification differences? If you’ve wondered about these questions, you’re not alone. In the top Google searches that include terms such as “financial advisor,” these are the questions that consistently come to the top.
We asked Richard Juckel, Vice President, Advice and Wealth Management CFP®, CRPC® at Ballast Advisors, LLC to help break down the differences between financial professional terms and designations to help you feel more empowered and confident when it comes to choosing a financial professional.
So what is the difference between Financial Planner, Financial Advisor and Wealth Advisor?
When you see a title on a financial professional’s business card, think about it like a specialty.
“Generally speaking, a Financial Planner may be saying they prefer to work with clients to develop a strategy to help meet their long term goals,” explains Richard Juckel, CFP®, CRPC® in Woodbury, Minn. “A Financial Advisor, on the other hand, is a fairly broad term that you might associate with someone who helps you manage money related matters. A Wealth Advisor may focus more specifically on helping clients preserve, grow, and protect accumulated wealth.”
Regardless, one should not rely solely on a financial professional’s business card to determine whether the financial professional has the expertise you need. Instead, consider whether the financial professional is a registered representative, investment adviser representative, insurance agent, or some combination of the three.
It’s also important to understand these designations because it impacts what and how you will pay for services. Investment professionals are typically paid in one (or more than one) of the following ways: An hourly fee; A flat fee; A commission on the investment products they sell you; A percentage of the value of the assets they manage for you; Or a combination of fees and commissions.
“Generally registered representatives and insurance agents may earn commission for products sold while an investment adviser representative is only paid directly by the client for advice services rendered,” adds Juckel.
Financial Professionals claiming a “Fee-Based” compensation model are generally a registered investment adviser or investment adviser representative and may collect fees directly from the consumer or in the form of commissions.
“For example, Ballast Advisors generally collects fees from clients for advice services rendered such as creating a financial plan, managing an investment portfolio, but may also collect commissions if a client elects to implement on insurance product recommendations (such as life insurance, long term care insurance, or disability insurance),” explains Juckel. “For this reason, Ballast Advisors should be considered a Fee-Based Advisor and any of the Investment Advisors Representatives associated with the firm would also be considered to have a fee-based compensation model.”
Making Sense of Financial Professional Designations
Next, consider what designations the professional holds.
“The Certified Financial Planner™ designation, for example, is only available to those who have fulfilled CFP Board’s requirements to call themselves a CFP® professional,” says Juckel.
The “Chartered Retirement Planning CounselorSM (CRPC®) is a professional financial planning designation awarded by the College for Financial Planning®. Individuals may earn the CRPC® designation by completing a study program and passing a final multiple-choice examination.
And there are more… CFA® (Chartered Financial Analyst® ), PFS (Personal Financial Specialist), CIMA (Certified Investment Management AnalystSM …) it’s no wonder the landscape gets confusing.
One helpful online resource to navigate the difference is found on the Financial Industry Regulatory Authority (FINRA) website that allows you to search and compare multiple accredited designations. You can also see whether the issuing organization requires continuing education, takes complaints or has a way for you to confirm who holds the credential. It’s also important to visit the website of the organization that issued an advisor’s credential to verify that the advisor is a member in good standing.
See Related Link: FINRA Professional Designations
What does Fiduciary mean?
Lastly, consider whether or not your financial professional is acting as a Fiduciary on your behalf.
The fiduciary standard of care as defined by the CFP Board is “One who acts in utmost good faith, in a manner he or she reasonably believes to be in the best interest of the client.”
Here’s a great video explaining the Fiduciary Standard
https://abm.emaplan.com/ABM/MediaServe/MediaLink?token=f483e047465343d0bbb425930bf50a5a
If Video doesn’t load, CLICK HERE
How do I choose the right Financial Professional?
Because the financial services industry regulations prohibit advertising traditional testimonials from past and current clients, it’s important to do your own research, ask questions, and interview potential advisors to find the right fit.
“First and foremost, you should consider your personal needs. Are you looking for specific investment advice? Evaluating insurance? Trying to accumulate wealth or protect the wealth you’ve already created?” says Juckel.
Consider a firm that offers comprehensive services.
“Many financial decisions may have unintended consequences if acted on in a vacuum. For example, converting money from a Traditional IRA has immediate tax implications with potential future tax cost savings. It’s not enough to simply say a Roth Conversion is or is not a good idea. It’s a matter of each individual’s personal circumstance,” he adds. “Ballast Advisors maintains a list of other professionals and regularly makes recommendations for clients to work with these outside professionals to help with tax preparation, estate planning, and home financing. As a general rule, we would advise a client to check with us first for any and all things related to their personal finances.”
If you need more guidance, check out this brochure that can help you select the professional that is right for you.
If you’re interested in receiving additional financial advice as a business owner, contact Ballast Advisors for a complimentary consultation at a location near you:
| Ballast Advisors – Woodbury Area 683 Bielenberg Dr., Suite 208 Woodbury, MN 55125-1705 Tel: 651.478.4644 |
Ballast Advisors – Arden Hills Area 3820 Cleveland Ave. N, Ste. 500 Arden Hills, MN 55112-3298 Tel: 651.200.3100 |
Ballast Advisors – Punta Gorda & Port Charlotte County Area 6210 Scott St., Suite 117 Punta Gorda, FL 33950-3901 Tel: 941.621.4015 |
See related resources:
Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request. The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice.
