We all know we should do it, but speaking to a financial advisor can be a rather daunting task. However this should not be the case, financial advisors are meant to be on your side — as your agent, fighting to help protect you and your future. It is important to meet and discuss your financial situation with a financial advisor as they are the experts in this field. In this article, we shall delve deeper into the different types of financial advisors, while taking a look at what type of financial advisor might be the best fit for you.
If you are like the vast majority of people, you may have already connected with a financial advisor through your family or friends. But how do you really know if this adviser is the right one for you? In all likelihood, most people would not have vetted the advisor but built their relationship on pure trust. Don’t get me wrong trust is an imperative part of every relationship, but sometimes you might need more than that. The following are the three major types of advisers. Knowing the qualifications and specialties of an adviser can be essential to determine if they are the right fit for you.
Certified Financial Planner (CFP)
A CFP is someone who has gone through rigorous rounds of financial planning trainings and examinations. They are well verse on topics like investment, insurance, estate planning, retirement and taxes. If you are looking for the best generalist advisor who has a sound knowledge in all aspects of finance, they are definitely your go to. In order to get certified, advisors have to be equipped with real-world experience in the financial planning industry. So you can be rest assured your adviser knows what they are talking about.
Chartered Public Accountant (CPA)
A CPA will be the ideal advisor if accounting of your own finances is the issue. Though they may not have the broader financial knowledge, they are able to help with taxes — organising of investments and saving for the future in such a way that you pay the least tax possible. These advisors are more useful for those who run a business or have inflow and outflow of cash from a wide variety of sources.
Chartered Financial Analyst (CFA)
A CFA will have the broadest knowledge about finance and investment. To be fully qualified, it takes them almost 7 years — 3 years of coursework and over 4 years of work experience. Although CFAs are experts in investing, they may not be as knowledgeable in the insurance, budgeting or estate planning sectors. Generally, CFAs are recommended to people who want a deeper understanding of possible investment opportunities.
Having a compatible personality with your financial adviser can make the tedious financial planning process all the more smoother and enjoyable. Every financial planner will have their own unique personality and communication approach. For example, some advisers go straight to the point and sort out your needs as efficiently as possible. Whereas others will bring you through their thought processes — their calculations and methods used to obtain the projected figures. Then, there are other advisers who may seem more down to earth, and approachable. Maintaining a synergetic relationship with an adviser is an absolute must as your financial future relies on it. In general, an adviser-client relationship is long-term.
As above, picking the right financial advisor is a very personal choice which will vary from person to person. The two main things to consider are their qualification and individual personality — if their practicing style flows with you. I hope this article can help you make a more informed decision the next time you are shopping around for a financial planner. Good luck and enjoy the journey towards a better financial security.