Financial Advisor, Investment Advisor, Wealth Manager…What’s With All These Titles?

In my opinion, the financial services industry is in many ways designed to confuse the public and give the appearance of more complexity than exists.  The titles used by individuals delivering some form of financial advice are among the ways confusion is created.

I am painting in broad strokes today; the following is not true of everyone in the industry. The difficult is recognizing the truthful from the deceptive individuals.

I have been using the phrase “financial advisor” to describe an individual providing financial advice. The problem is, financial advisor has no clear definition and there are no requirements to use that as one’s title.  I use the phrase as a catch-all and add no value to its use. Being a financial advisor does not describe an individual as having any particular training or expertise…it simply means they provide financial advice.

At times, I will use the phrase “financial planner.” Again, there is no definition of what a financial planner is and what a financial planner provides. When I use this title, I am indicating an individual who believes in more than managing investments and whose service is designed to help you reach your life goals by helping you with your whole financial life (see this post.) In the industry, a financial planner could be an individual providing a true financial planning service, but it could also be an individual only providing investment or insurance advice.

Other titles with equal ambiguity include financial counselor, financial adviser, wealth manager, investment advisor and many others. There may be some regulatory requirements to use a certain title, but the hurdle is generally very low to achieve those requirements. When speaking with a financial advisor, do not assume their title indicates their specialty or expertise or job function.  A wealth manager could actually be an insurance sales person. A financial adviser may actually be a stock broker.  

This confusion is often intentional and meant to make it difficult to determine whom you are working with.  There are financial planners who deliver tremendous, powerful services that can greatly impact your life. Then there are others in the industry who would like you to believe you are receiving the same services, but are actually using financial planning as a means to sell you additional financial products

As I have previously advised, know what you want in an advisory relationship. If you want someone to help only with your life insurance needs, work with a life insurance agent. If you want someone who provides true financial planning services, make certain this is the service they actually provide.  It can be tricky. How a financial advisor is compensated can help decide what service they actually provide, but it is not the full story. Designations such as CFP®, ChFC and others can also provide some help, but often are more confusing than helpful (a topic for a future post.)

Unfortunately the burden is strictly on you to determine who delivers the service you desire.


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