Do you work with an investment advisor or financial advisor?
When it comes to the world of financial planning representatives and resources, it can be quite cumbersome. There are endless resources as far as online articles, publications, daily news, etc. that some may utilize and lean on for their own purposes, or simply staying up to date. When it comes to professionals in the financial community, you have brokers, financial planners, investment advisors, fiduciary advisors, investment clubs, and many more. How do you know which you are working with, and which is right for you?
Understanding Investment Advisors
I’d like to focus on investment advisors and financial advisors in the hopes of bringing some clarity to the picture. Investment advisors are going to have a primary focus on investments. I do not mean to state the obvious, but it is worth noting. Investment advisors can act in an institutional capacity, and this typically entails providing information and specifics on an investment (IE some type of funds or family of funds) to an institution, so that institution can then offer it to the clients it works with. Others may maintain more of a retail or individual focus with their approach and available offerings. Many have a targeted focus but may point that focus beyond stocks and bonds, say into the REIT space (Real Estate Investment Trust) or other options.
The Value of Investment Advisors
As I mentioned, investment advisors typically maintain a focus on some sort of investment, said otherwise, a product focus. Don’t get me wrong, investment advisors are a benefit to the industry and individuals alike as they help inform and bring new offerings to the table. Not only are new offerings, a different perspective, and information/access a benefit, but by default, it brings natural competition to the marketplace, which is generally a good thing.
The Comprehensive Approach of Financial Advisors
Should you find yourself needing investment advice or direction, but are also looking for guidance beyond that, a financial advisor may be a more appropriate fit for you. A primary difference between the two is that a financial advisor (in theory) will be looking at and considering your entire financial picture, in addition to your goals and objectives. Said otherwise, a more comprehensive approach. While discussions around investments tend to be the most regular and popular, there is much more to your financial plan than solely investments. Some examples of this would be goals. What are you trying to accomplish and based on what you are doing today, are you moving closer to or further away from accomplishing it? Some additional examples may include developing an income plan as you approach your retirement, or developing a tax plan based on your individual situation, or a specific savings plan.
Asking the Right Questions
In a vast sea of resources that can quite easily become overwhelming, a good place to start is by asking questions, which is often the case. As you meet with different financial professionals, such as investment advisors, financial advisors, brokers, etc., asking questions is an efficient way to gain clarity on the strengths, scope, and ability of the individual you are meeting with. Should you find the conversation centering around, and potentially limited to investing, you will likely glean recommendations, and advice will most likely be exclusively around investments. For some, this can be the desired and appropriate fit and relationship. For others looking for a comprehensive approach, sharing goals and asking how they could be achieved, in addition to some of the other topics closely tied to financial planning (IE income planning, tax planning, estate planning, etc.) should be included in the line of questioning.
This is being provided for informational purposes only and should not be construed as a recommendation to buy or sell any specific securities. Past performance is no guarantee of future results, and all investing involves risk. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. The views expressed are those of Jeff Martin and do not necessarily reflect the views of Mutual Advisors, LLC, or any of its affiliates. Investment advisory services offered through Mutual Advisors, LLC, DBA Silver State Wealth Management, an SEC registered investment adviser.
