A financial adviser or financial planner is a professional who gives specialized financial advice to clients according to their individual financial circumstances. In the United States, financial advisers are regulated by the Department of Education. In most states, financial planners must also complete certain professional training and obtain registration with a state regulatory agency and be formally registered with the National Association of Insurance Commissioners to give financial advice. Financial advisers can be employed by individual families, corporations, insurance companies, investment companies, pension and fund management firms, and government agencies. Many financial advisers are self-employed and do not work for any one firm or organization.
A wide variety of financial advisors offer different types of services. Some specialize in advisory services, others in investment advice, and others still offer full service in general retirement planning and investing. Some of these types of advisers have offices and staff and some do not. The type of planner you select depends on the specific needs of your family and financial situation.
Many financial advisors offer a wide range of advisory and investment services including tax planning, asset allocation, investment products, estate planning, and retirement planning. Some advisers offer advisory services free of charge while others may require a fee for their services. A fee-based financial advisor may require a percentage of your assets as fees for his services. On the other hand, a fee-only financial advisor may only require a flat rate for his services. No matter what type of financial advisors you choose, they all expect you to pay for the education and information that they impart.
A majority of financial advisors also have a standard set of guidelines or a suitability standard to follow in providing their advice to clients. The suitability standard is usually found in the fine print of an investment brochure or policy or in the website of the company. This standard provides the basis for the advisors’ recommendations to their clients. For instance, the brochure and the website would most likely follow the standard suitability standard because it would be in the best interests of the client to contact them with questions regarding the investments in which he or she intends to make. Therefore, it is important to carefully review the materials provided by your potential advisors.
It is also important to note that the standard used by certified financial planners and fiduciary standard is not the same. Certified financial planners work within a certain framework established by the American College of Financial Services (ACFS). Their services and their fees are therefore influenced by the principles of the law which are known as the “competitor standard.” The services offered by certified financial advisors work in tandem with the laws and regulations that have been enacted to protect investors.
Whether you are working with an advisor on a fee-only basis or through an IRA account, it is important to understand how the services you are receiving will be affected by the choices you make. You can make informed decisions concerning your financial health through obtaining as much information about the products and services you are choosing before making your final decision. This will allow you to better understand how your investment goals and the type of advisor you choose will affect your financial goals and the investment strategies you choose. Your qualified financial advisor should discuss all of your options and explain all fees associated with them.