4 Financial Professionals – And How They Can Work For You

by NerdWallet | December 17, 2013 10:00 am

4 Financial Professionals – And How They Can Work For You

Are you concerned about retirement? Not sure how much you can pay toward your child’s college education? Just want to see if you’re on the right track?

These questions can all be overwhelming, especially when you have so many other things to worry about. Fortunately, there are many different types of financial professionals who are trained to help you reach both long- and short-term goals.

Before you get help, though, you’ll want to know whom to contact, and for what services.

Broker

What is a broker[1]?

A broker is either an individual or a company that acts as an intermediary between securities and investors. They arrange transactions between buyers and sellers for a commission, and are sometimes called financial advisors. There are also full-service brokers and discount brokers[2].

What’s the difference between a full-service broker and a discount broker?

Full-service brokers provide an array of financial services, including tailored advice regarding retirement plans and tax tips. They are usually compensated based on how much you trade. Discount brokers are less expensive, but traditionally, have not provided financial advice. However, more and more brokers are offering[3] data analysis software and research reports to help investors.

What are the qualifications?

Brokers must pass two exams issued by the National Association of Security Dealers: the Series 7 and the Series 63. These certify the broker’s knowledge of financial products and regulations. They must also register with the Securities and Exchange Commission (SEC[4]) and maintain membership with the Financial Industry Regulatory Authority (FINRA[5]).

Investment Advisors

What is an investment advisor?

Investment advisors provide information about securities to their clients; if properly credentialed, some may also trade securities or manage portfolios. However, investment advisors have an additional, fiduciary responsibility to their clients, and, unlike brokers, are required to act in their best interests. In other words, while brokers may recommend a more expensive product, as long as it meets their clients’ needs – and runs up their commission – an investment advisor must mention less expensive products that are available. They may be paid by an hourly fee, a fixed fee, or a percentage.

What are the qualifications?

Registered Investment Advisors (RIAs) may need to register with the SEC, depending on the value of the assets they manage. They must also pass a series of exams administered by FINRA.

Accountant

What is an accountant?

Accountants may advise individuals and companies on tax issues, including reporting and audits. They may also prepare your return for you. Some CPAs (or Certified Public Accountants) are certified as Personal Financial Specialists (PFS), and can help clients with financial planning and goal-setting, as well. Accountants are either salaried or paid a fixed rate.

What are the qualifications?

Accountants must pass a national exam administered by the American Institute of Certified Public Accountants (AICPA[6]) in order to become a CPA, and meet other requirements as determined by their state boards. PFSs meet additional financial requirements determined by the AICPA.

Financial Planner

What is a financial planner?

Financial planners create programs for clients based on their current financial situations and future goals. They may specialize in a certain field, like retirement or estate planning, and can cater to both companies and individuals. Like investment advisors, Certified Financial Planners (CFP[7]s) have a fiduciary responsibility to their clients, but some suggest that those paid by commission may experience conflicts of interest, and recommend fee-only planners.

What are the qualifications?

While brokers, accountants, and investment advisors must have certain training, anyone can call themselves a financial planner. However, if you can insist upon a CFP, that is someone who has passed a series of exams mandated by the Certified Financial Planner Board of Standards, and abides by their continuing education requirements.

The Bottom Line

It’s certainly possible to create a financial plan, or sell stocks via an online brokerage account[8], without professional help – many prefer to do these things for themselves. Still, if you find yourself in over your head, don’t hesitate to contact the appropriate financial professional. Just be sure they’re credentialed by the appropriate organization – don’t hesitate to double-check their claims – and that you’re comfortable with their fee structure and philosophy. You should still have a say in the way your money is handled.

Read More From NerdWallet

The Best Online Brokers for Penny Stock Trading[9]

The Best Brokers for Options Trading Online[10]

The Best Online Brokers for Free Stock Trading[11]

Endnotes:
  1. broker: http://www.nerdwallet.com/blog/investing/stock-broker/
  2. discount brokers: http://www.nerdwallet.com/blog/investing/brokerage-firms/
  3. offering: http://www.nerdwallet.com/blog/investing/brokerage-account/
  4. SEC: http://www.sec.gov/
  5. FINRA: http://www.finra.org/
  6. AICPA: http://www.aicpa.org/Pages/default.aspx
  7. CFP: http://en.wikipedia.org/wiki/Certified_Financial_Planner
  8. online brokerage account: http://www.nerdwallet.com/blog/investing/best-online-brokers/stock-trading-accounts/
  9. The Best Online Brokers for Penny Stock Trading: http://www.nerdwallet.com/blog/investing/best-online-brokers/penny-stock-trading-accounts/
  10. The Best Brokers for Options Trading Online: http://www.nerdwallet.com/blog/investing/best-online-brokers/best-brokers-online-options-trading-accounts/
  11. The Best Online Brokers for Free Stock Trading: http://www.nerdwallet.com/blog/investing/2013/free-stock-trading/

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