Financial - Advisors and/or Planners
Financial planners are professionals who help clients identify their financial goals and understand their levels of risk tolerance. They help formulate a long-term plan of action specific to the needs of each client. Planners often work to implement the plan, recommending investments consistent with the client’s financial and social objectives, preferences, and tax situation. Planners may charge the client a flat fee or an hourly rate to design a comprehensive financial plan. There may be commissions or ongoing asset-based fees paid to the planner for implementing and overseeing investments within the plan. Comprehensive financial plans generally include budgeting and cash flow, net- worth analysis, risk-management assessments, tax planning, education-fund planning, and estate planning. Many financial planners advise businesses and institutions in addition to individual investors, and may have earned one or more of the following professional designations:
Accredited Investment Fiduciary® (AIF) A professional designation that recognizes knowledge and competency in the area of fiduciary responsibility. Holders of the AIF mark have successfully completed a specialized program on investment fiduciary standards of care and subsequently passed a comprehensive examination. Designees must be able to understand and articulate the legal and regulatory environment surrounding the fiduciary, be able to develop and implement an effective investment management process applying the principles of Modern Portfolio Theory, document all due diligence, and above all, treat their clients with the utmost prudence and care.
Certified Financial Planner® (CFP) CFPs have completed a two- or three-year course and comprehensive examination. Depending on the level of degree work completed in a collegiate setting, a CFP must have three to five years of financial planning-related experience prior to receiving the right to use the CFP mark and must voluntarily ascribe to CFP Board’s Code of Ethics. CFPs must obtain 30 hours of continuing education every two years in the body of knowledge pertaining to financial planning areas such as estate planning, retirement planning, investment management, tax planning, employee benefits, and insurance.
Certified Public Accountant® (CPA) Accountants often offer financial products/services, but CPAs with the “Personal Financial Specialist” designation have at least 250 hours of yearly experience in financial planning, and have passed an exam. Depending on the state, most CPAs are required to hold a college accounting degree.
Chartered Financial Consultant® / Chartered Life Underwriter (ChFc/CLU) These designations are awarded upon completion of a three-year course of study with the American College focused on taxes, estate planning, insurance, financial planning and portfolio management. Insurance agents (or life underwriters) are licensed by the states in which they do business.
Registered Investment Advisor (RIA) Registered with and regulated by the Securities and Exchange Commission (SEC) and/or the states in which they conduct business. Compensation paid to RIA firms is generally based on fees earned on assets under management.
Brokers are NASD (National Association of Securities Dealers) Registered Representatives that buy and sell securities on behalf of their clients.