| Today's challenging investment markets require | | | | Insurance Agent-insurance agents are licensed by the |
| investors to make smart, rational financial decisions. | | | | state in which they work and sell insurance products. |
| Investors need to have a well-crafted financial plan, | | | | Insurance agents may be affiliated with a large life |
| access to high-quality financial and investment | | | | insurance company or may work as independent |
| products to implement that plan, and perhaps most | | | | agents. Most states have an ongoing continuing |
| important, manage their own emotional swings that | | | | education requirement and other licensing |
| are a natural part of having money exposed to | | | | requirements. |
| volatility and risk. | | | | Registered Investment Advisor-these firms manage |
| Given these challenges, getting trustworthy financial | | | | investments for clients and are registered with the |
| guidance from a professional can be a significant | | | | U.S. Securities and Exchange Commission (or the |
| benefit for individual investors. Making personal | | | | state in which they operate if they have less than |
| financial decisions has never been easy, and a skilled | | | | $25 million in assets under management). Registered |
| advisor can help guide you through the financial | | | | firms have a legal fiduciary obligation to to act in their |
| challenges you and your family may face. This article | | | | clients' best interests. |
| introduces you to the various types of financial | | | | Registered Representative-these individuals are |
| advisors in the market and gives you ideas for how | | | | sometimes known as stock brokers and are licensed |
| to select one that is right for you. | | | | by the state in which they work. They have passed |
| The first step in selecting a financial advisor is to | | | | one or more exams administered by FINRA, the |
| become familiar with the various types of advisors | | | | industry's self-regulatory body, and must meet |
| available. There are many different investment | | | | continuing education requirements. Registered |
| professionals that work with individual investors. | | | | Representatives are affiliated with securities firms |
| Within this diverse group, there are many | | | | that oversee their activities. |
| differentiating factors such as unique areas of | | | | Before meeting with potential advisors, it is important |
| professional focus and expertise, different | | | | that you understand your financial needs and |
| compensation methods, and a variety of professional | | | | objectives, the services you are looking for, and |
| designations, educational backgrounds, and | | | | what you expect to gain from the advisory |
| experience. | | | | relationship. You should interview several advisors |
| Financial advisors may handle investment portfolios in | | | | before you select one, and you should feel |
| different ways. For example, some advisors may only | | | | comfortable that the advisor you choose: (1) |
| offer investment advice while others might combine | | | | communicates with you openly and directly, and is |
| a variety of disciplines-such as estate, tax and | | | | willing to meet with you on a regular basis, (2) shares |
| financial planning-together with traditional portfolio | | | | your investment philosophy and puts investment |
| management. The latter group could be considered | | | | plans in writing, (3) believes that client education is |
| investment generalists or financial planners, while the | | | | very important in addition to being highly educated |
| former might be known as investment managers or | | | | himself, and (4) puts a priority on your needs and |
| investment specialists. Regardless of whom you | | | | objectives. |
| choose, your advisor showed be willing to refer you | | | | A good advisor will actively listen to you and answer |
| to an related professional for those areas that are | | | | your questions directly. She will volunteer answers to |
| outside of his or her knowledge base. | | | | important questions that you may have forgotten to |
| Here are some common types of advisors and | | | | ask, and take the time to ask insightful questions |
| professional designations you should become familiar | | | | about your situation to better understand your |
| with: | | | | needs. The focus of the conversation should be on |
| Certified Financial Planner-these individuals have | | | | your needs and how the advisor can best serve you |
| earned the CFP® designation by passing a | | | | and achieve your objectives. |
| comprehensive exam covering the financial planning | | | | Financial advisors are usually compensated either |
| process, income taxation, investments, retirement | | | | through commissions on investment products they |
| planning, insurance, and estate planning. They have at | | | | sell, fees that clients pay in exchange for investment |
| least three years of work experience in a financial | | | | advice and portfolio management, or a combination |
| planning related field and adhere to a code of ethics | | | | of both. Regardless of the method your advisor |
| as well as a continuing education requirement. | | | | uses, you should feel that she is focused on you and |
| Certified Public Accountant-individuals who hold a CPA | | | | your needs rather than her own compensation. It is |
| designation have completed a college-level program in | | | | becoming increasingly popular to work with fee-only |
| accounting, passed the comprehensive test on | | | | advisors as they may have fewer conflicts of |
| accounting principles, and completed the specific | | | | interest than their commission-based counterparts. |
| requirements of the state in which they practice. | | | | After you hire an advisor you will want to be sure |
| Some CPAs have also earned the Personal Financial | | | | that you communicate with him often and make sure |
| Specialist designation by satisfying additional | | | | that he is informed of any changes in your life or |
| requirements. | | | | financial circumstances. You should receive frequent |
| Chartered Financial Analyst-advisors who have earned | | | | communications and reports as a standard matter of |
| a CFA charter hold an undergraduate degree from an | | | | practice, but you should also initiate additional |
| accredited university, gained at least four years of | | | | communication as often as you feel necessary. You |
| work experience in the investment industry, and | | | | should consider your advisor a resource to educate |
| passed a challenging series of three, six-hour exams | | | | and serve you and your family, so don't be reluctant |
| taken over a multiyear period. CFA charterholders | | | | to ask for help or advice often. A good advisor will |
| have demonstrated extensive knowledge in the | | | | promptly respond to you in a professional and |
| areas of investment management and adhere to a | | | | courteous manner. |
| stringent code of ethics. | | | | |