What is a Financial Advisor?

This term is a catch all for a professional who helps manage your money or investments. The term includes financial planners and also stockbrokers, insurance agents, money mangers, hedge fund mangers, bankers, and more. A Financial Advisor must hold a FINRA Series 65 license which, to obtain, they just have to pass one exam that consists of 130 questions. And you only have to get 94 out of those 130 question right. No classes or training required. Financial Advisors are more likely to focus on only investment management or selling products.

What is a Financial Planner?

This term defines a professional who helps create strategies to meet your financial goals in a holistic manner. They assist with budgeting, retirement, savings,and other financial aspects. A Financial Planner usually takes a more holistic approach and wants an ongoing relationship with clients, which is preferable. As of today, there is no federal regulation over the title that an Advisor or Planner can use. So, in other words, there isn’t any regulatory difference between the terms Advisor and Planner.

How can I find a trustworthy Financial Planner?

To start you should look at the professional’s certifications and designations, which will give you an idea about what they are certified to do and in what state. You would verify your plastic surgeon is certified with the American Board of Plastic Surgery and your State Medical Board before your operation right? Do the same with your Financial Planner.

First, go to BrokerCheck ( BrokerCheck.Finra.org ) to verify if the Planner you are looking at is currently registered with your state and whether there are any disclosures or complaints on record. This is a site run by the Financial Industry Regulatory Authority (FINRA) which is a government authorized organization. FINRA is authorized by Congress to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly.

Secondly, verify your Planner has proper credentials and I would recommend more than just a series 65 license. Certifications such as Certified Financial Planner, Chartered Financial Analyst, and Chartered Financial Consultant are higher designations to attain and require classes, tests, and training above the nominal requirements advisors with just the Series 65 exam have.

For example, a Certified Financial Planner™ (CFP) must hold a bachelor’s degree or higher, complete coursework on financial planning through a CFP Board Registered Program (usually 5-6 classes with a capstone course), have 6,000 hours of professional experience, pass two 3-hour tests, go through a background check, and agree to an ethics declaration annually.

I would recommend going with a Financial Planner that has a currently active Certified Financial Planner™ designation.

How can I find and verify the credentials of a CERTIFIED FINANCIAL PLANNER™?

 Go to the CFP website to find a currently active and certified CFP holding financial planner at www.LetsMakeAPlan.org