Who’s the Right Advisor for Me?


“The research is unequivocal that a competent financial guide can both help you achieve the returns necessary to arrive at your financial destination while simultaneously improving the quality of your journey.”

-Behavioral Alpha: The True Power of Financial Advice, Daniel Crosby, Ph.D., Nocturne Capital, 2016


Finding the Right Advisor in a Sea of 300,000

There are more than 300,000 “financial advisors and planners” in the U.S. 80% of them are men and their average age is 60. The title financial planner or financial advisor is used to describe anyone from an insurance agent to a stockbroker to an investment advisor to a Certified Financial Planner (CFP). And there is no shortage of certifications and acronyms on advisor business cards. No wonder people are confused when trying to decipher who they should get financial or retirement advice from.

Many investors assume that any professional who refers to himself or herself as a “financial planner” has received some kind of certification. Unfortunately, there’s no rule governing who can go by the title of financial planner. Anyone can set up shop using that title, whether or not they know anything about finance or have any experience. You’re better off sticking with financial planners who have an actual certification by a governing agency, be it state or federal.

Financial advisors used to be hired predominantly by people with upwards of several hundred thousand dollars. No matter if you have $1 million of $1,000 to invest, you still have many options. That’s changed over the last decade as the financial landscape has changed. Among other changes are the self-funding of retirement plans vs. pensions. People are also living longer and the financial decisions that accompany are long life are more complicated. The financial industry and products are also much more complex with many more offerings. Not to mention the complexities around retirement, which are myriad.

Here’s a quick overview of the types of advisors and planners and their certifications:

Registered Investment Advisor (RIA): A person or firm who advises individuals on investments and manages their portfolios. RIAs have a fiduciary duty to their clients, which means they have a fundamental obligation to provide investment advice that always acts in their clients’ best interests. As the first word of their title indicates, RIAs are required to register either with the Securities and Exchange Commission (SEC) or state securities administrators. Registered investment advisors seek to offer more holistic financial plans and investing services. They offer very different fee schedules and are typically fee-based by assets under management.

Registered Representatives: Work for a brokerage company and are well versed in investment products including stocks, bonds, and mutual funds. Registered representatives are required to have passed their Series 6 and/or Series 7 exams. They must register with the Financial Industry Regulatory Authority (FINRA) and are governed by suitability standards (which means they ensure an investment is suitable given an investor’s investment profile. Registered representatives, also known as stockbrokers work on commission. Since reps are regulated by FINRA, you can check an advisor’s background on FINRA’s Central Registration Depository at www.finra.org.

Many financial advisors or planners attain other certifications (some of which are listed below). So, for example, you may meet with someone who is both an RIA and a CFP or an RIA and an insurance agent.

Certified financial planner (CFP): The CFP certification is offered by the CFP Board and is generally considered the gold-standard certification for financial planners. CFPs are always fiduciaries, meaning they are legally required to put their clients’ interests ahead of their own at all times.Chartered financial analyst (CFA): The CFA designation is granted only by the CFA Institute. To gain this certification, advisors must meet significant education and work experience requirements and pass a series of three exams. CFAs have expertise in investment analysis and portfolio management.

Chartered financial consultant (ChFC): A chartered financial consultant (ChFC) studies college-level insurance, estate planning, retirement funding, investments and others subjects in financial planning.

Retirement Income Certifications: There are three major retirement income planning certifications that many financial advisors choose to attain to demonstrate their expertise in retirement planning. These include: Retirement Income Certified Professional (RICP), Retirement Management Analyst (RMA), and Certified Retirement Counselor (CRC). While these don’t guarantee your retirement advisor will have a full command of retirement planning, they do indicate a level of education beyond the certifications above.  What’s more important than certifications, however, is the process and planning that a retirement advisor offers you. See page 4 for details on finding the right retirement advisor.

Read this entire paper on finding the right advisor for you

When you want some directions on getting connected with a retirement advisor in our network or other solution providers, talk to a RetireMentor.

Comments are closed.