Who Can Offer Financial Advice?

Financial Planning

Who Can Offer Financial Advice?

One term does not fit all, titles vary from financial planners to wealth consultants -- and so does their financial education and expertise.

A Plethora of Planners

A generation ago there were stock-brokers, life-insurance agents and, for the wealthy, bank-trust officers. Nowadays, the U.S. is swarming with planners and advisers of every stripe: financial planners, retirement planners, life planners, independent investment advisers, wealth-management advisers and so on.

In any city or retirement haven, you'll probably run into any of the following purveyors of financial assistance:

Certified Financial Planner: The retired Army officer who decided late in his military career to study financial planning. He passed the exam to become a certified financial planner and now rents a Spartan office, furnished with a shelf full of Morningstar publications and a computer with software on mutual funds and asset allocation. It's a one-man shop, and you and your spouse may be among only a handful of clients.

There are also more experienced number crunchers who enter this field later in life. A corporate CPA who took an early-retirement package and works from home as a financial planner. Her clients want to manage their 401(k) and IRA withdrawals so that they can enjoy retirement and help pay for their grandchildren's education. She'll charge $150 or more an hour, or at least $3,000 a year, to create a plan and be a sounding board. You'll get an excellent computer-generated road map, but it will be out of date if inflation creeps up and tax laws change.


Wealth Management: A local firm that specializes in trusts, estates and bequests and calls its business "wealth management." The partners could be lawyers, so you'll pay dearly. But they'll plan your estate so that after your death the charities and heirs of your choice will get your money. Just don't ask them to talk about investments. That's not their thing, so they'll outsource your money to an investment manager who might not be particularly successful.

Independent Broker-Dealers:A trio of former stockbrokers who got sick of pitching stocks and sicker of Wall Street's reputation. They quit to set themselves up as independent advisers and representatives of an unfamiliar "broker-dealer" firm that holds your accounts and executes recommended trades.

The brokers and their eager, young staff will charge a fee of 1% of your assets (maybe less, maybe more) to manage your money personally. But they also sell mutual funds and prepackaged, "wrap" investment accounts, which generate fees for a minimum of work.

Any of these people may be right for you. Or they may charge you thousands of dollars for something you can do yourself, possibly with the help of an accountant or some other lower-cost specialist.


Mass Merchants: If an independent adviser doesn't appeal to you, you might consult a big firm, such as Fidelity Investments, Vanguard, Charles Schwab or TD Ameritrade, because that's where you have your IRA and they offer planning services. But look into what you're getting: Schwab and TD Ameritrade, for example, may simply refer you to a list of independent advisers that the company has vetted.