Understanding Financial Advisors

At some time in your life, you may need someone to help you manage your financial affairs. When that time comes, you'll be surprised to find out just how many financial advisors are out there, waiting to help you. The key to choosing the best advisor is knowing what services they provide, and what services you need.

What You Should Know

Sound easy? It isn't always. Choosing a financial advisor can be complicated, simply because advisors vary widely. Even though many advisors call themselves by the same name - like financial advisor or stockbroker - they don't all provide the same services. And, they don't always get paid in the same way. This makes comparing prices a challenge. That's why it's critical to ask each professional very specific questions, so that you know what you're getting and what you'll pay.

Financial Advisor or Investment Advisor?

Financial advisors fall into two categories:

Financial advisors generally take a broad view of your financial affairs. They assess every aspect of your financial life, including your savings, investments, insurance, taxes, retirement, and estate planning. They work with you to identify your financial goals and develop a plan to meet those goals. Of course, not all financial advisors provide all of these services. Some advisors might focus on your investments, but not on your total financial picture. Others might recommend that you invest in only a limited range of products.

Investment advisors get paid for giving you advice about stocks, bonds, or mutual funds. These advisors may also manage your portfolio by buying and selling securities. Of course, not every investment advisor provides both of these services. Some will simply make trades for you, but won't give you any advice.

Here's a simple way to think about it. Most financial advisors are investment advisors. Not all investment advisors are financial planners.

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