As an investment professional I’m often referred to as a financial advisor, which is accurate – though only in certain ways. The term financial advisor is not my favorite and I seek to avoid using it as much as possible.
The problem is, the term is too broad and vague. Its meaning can take the shape of many different professions all wrapped up in one overly-simplified title. I am not a financial advisor by title. Rather, I’m an Investment Advisor and Portfolio Manager. That clearly defines what I specialize in. I’m clearly clarifying my services: recommend an investment strategy, and manage that portfolio directly on your behalf.
Financial advisor is not that specific. Within the financial services industry a financial advisor can assume numerous roles, such as:
●CPA (Certified Public Accountant)
See the distinctions? An investment manager doesn’t broker, or sell products, or keep the books. Constraints are built into each of these areas (all legitimate specialties, by the way – the point here does not denigrate financial advice specialties).
Mainly, some have limitations on services offered because of regulations and licensing requirements. That’s the catch on the term financial advisor; it is vague, misused, and can come in too many forms.
We live busy lives. We seek expert advice for services and products we are not familiar with. Do you know what form your financial planning needs take? Within this industry of financial management we all have a specialty. Do you know your advisor’s niche?
Knowing your agent’s/advisor’s niche is crucial. As good practice I think its best that you work with specific individuals to serve specific roles.
Allocate all insurance matters to an insurance agent who specializes in nothing but insurance. Hire an investment advisor that’s highly skilled at investing. Use a CPA who know everything about taxes. And, have an estate attorney who can write up your wills and trusts. In today’s world it’s just too hard to be all things financial.
An additional caution flag: Your choices could create conflicts of interest between the you and the advisor. What, for instance, if it’s in the advisor’s best interest to sell you certain specific products (insurance, by example)? Maintaining independent relationships for each of your needs create a natural checks-and-balances system that can protect you.
If you have never worked with a financial professional, it behooves you to understand right away that if someone has a license for certification it doesn’t automatically mean that the person is competent or an expert. Vet us first before you sign on. As the saying goes, trust but verify.
When you seek to hire any professional, you are in charge of the interview process. Ask as many questions as possible and take your time to do all the necessary homework.Avoid rushing these kinds of decisions.
It’s important to know that in the investment services industry no single advisor or office is the same – even if the name out front is.
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