Who Is Your Investment Professional?
Qualified investment professionals help clients make sound financial decisions in good times and bad. Investment professionals include investment advisers, registered representatives (formally known as stockbrokers), and financial planners. Before you choose to work with an investment professional, it always pays to ask about their background and investment process or products before you invest your money with their firm.
Who Is A Financial Advisor?
A Financial Advisor may also be an investment professional, but maybe not. The title "Financial Advisor" is an umbrella term for a professional who provides financial services to clients based on their financial situation. There are no specific requirements for this title, and it can include a financial planner, insurance salesperson, broker, and investment adviser. Before working with a "Financial Advisor," ask about their credentials, licenses, certifications, areas of expertise, experience, products, and services.
The title reserved for professionals who provide advice about custom portfolios designed to meet the needs of their clients is Investment Adviser. The Securities and Exchange Commission (SEC) regulates investment advisers with over $110 million of assets under their management, while advisers who manage up to $100 million register with their state securities regulator. In addition to managing your investment portfolio, investment advisers may offer financial planning services. The Series 65 is an exam and securities license required by most US states for individuals to act as investment advisers.
According to the North American Securities Administration Association, the three characteristics of an investment adviser are:
- "Provides advice or analysis about securities either by making direct or indirect recommendations to clients or by providing research or opinions on securities or securities markets.
- Receives compensation in any form for the advice provided.
- Engages in a regular business of providing advice about securities."
Be aware that many brokers (registered representatives) also register as investment advisers. Duel registration can create a conflict of interest at the point of sale. Go to adviserinfo.sec.gov to check the status of your investment professional's registration as an Investment Adviser or Broker. Registered Investment Advisors are legally mandated to adhere to the fiduciary standard at all times, while brokers are only held to this standard at the point of sale.
Registered Representatives (Brokers)
The FINRA (the Financial Industry Regulatory Authority) governs and enforces the rules for registered brokers and broker-dealer firms in the United States. To become a broker or registered representative, these professionals pass qualifying examinations to sell products and securities and be licensed by a state securities regulator. Use FINRA BrokerCheck to review your broker's registration, licenses, and disciplinary history.
Most financial planners examine your entire financial picture to help you develop and implement a detailed plan for achieving your financial goals. However, some may recommend only the products they sell, which may give you a limited range of choices. Financial planners can come from diverse backgrounds and offer various financial services. For example, your financial planner could be an investment adviser, insurance agent, broker, or accountant—but unless they are a CERTIFIED FINANCIAL PLANNER™ (CFP®), they may have no financial credentials at all. To qualify as a CFP® professional, candidates must:
- Have a bachelor's degree (or higher) from an accredited college or university;
- 6,000 hours of financial planning experience;
- Complete a CFP-Board registered program or hold another professional designation such as CPA, ChFC, Chartered Life Underwriter (CLU), CFA, Ph.D. in business or economics, Doctor of Business Administration, or Attorney's License; and
- Take a final certification examination.
The "Financial Advisors" at Hurlow Wealth Management Group are investment advisers and financial planners. Six out of the seven advisors are also CFP® Professionals. We choose not to register as brokers to avoid conflicts of interest that may influence our decisions as fiduciaries. To gain additional education, our professionals pursue additional designations such as CPWA®, C(K)P®, AIF®, CRPS®, CIMA®, RMA®, CPFA®. To learn more about these professional titles, visit FINRA's Professional Designations tool at: finra.org/investors/professional-designations. If you are looking for a fiduciary financial advisor, click here to schedule an introductory call.