Where To Go For Financial Advice

Where To Go For Financial Advice

Marco Rimassa, CFP^®, CRPC^®, CFA

The saying “it’s a jungle out there” may not be too far off point when someone has decided to seek help for their financial situation. From banks and mutual fund companies to representatives selling insurance to independent financial professionals and consultants, it’s clear that a potential client has several types of advisor to choose from when seeking financial advice—if an ‘advisor’ is even warranted. Sometimes, a point solution for a single financial need is all that’s needed, as with various types of insurance.

However, if there is a need for a more detailed financial review, it’s not always clear that potential clients understand the differences or know what they should expect to get from the relationship with the various sources for financial advice. It’s not enough to simply go to ‘a friend of a friend’ or someone else’s trusted advisor because those arrangements may not fit the situation at hand. After all, the ‘personal’ in Personal Finance can be a real source of complexity and uniqueness.

To help shed some light on the differences among the types of people offering financial advice, below is a look at three key categories of ‘advisor’. Which one is right for you depends partly on what you are looking for but also on the complexity of your individual financial situation. Your job as a potential client is to understand how the person you may work with conducts their business and how they will best serve your needs.

Fiduciary

Fiduciary advisors are often associated with individual financial advisory practices—these are your independent and registered investment advisors and usually have some type of professional skill-based credential to support their activities. The most well-known and popular credential here is the CERTIFIED FINANCIAL PLANNER^TM designation (and practitioners are known as CFP^® professionals). Fiduciary advisors are or generally:

Obligated to act in your best interest
Licensed and regulated by the Securities and Exchange Commission or by individual States’ securities departments
Meet on a regular or ongoing basis
Consider your entire financial situation
Compensated through fee-based arrangements—Assets Under Management, Flat Fee, or Retainer models
Put client interests above their own, which means that conflicts of interest should be mitigated or eliminated

Non-Fiduciary

Non-Fiduciary advisors are often associated with larger financial services companies such as banks, mutual funds, insurance companies, and the like. They usually have some type of industry or company-based credential to support their activities. Non-Fiduciary advisors are or generally:

Offer recommendations that need to be suitable for a client, although not necessarily in their best interests
Associated with financial product sales
Registered representatives of a larger firm
Respond to direct questions or specific needs with product recommendations, often sponsored by the company that they work for
Compensated through commission-based arrangements (including sales charges or Loads)
Disclose conflicts of interest, although these do not need to be mitigated or eliminated

Financial Coach

Financial Coaches are often associated with educational institutions or individual practices. Their focus may be on specific financial behaviors or results but could also encompass psychological relationships with money. They usually have some type of program-based or education-based credential to support their activities. Financial Coaches are or generally:

Referred to as Planners or Coaches or even Therapists
Support financial literacy and accountability, either as a one-on-one relationship or through a like-minded group
Meet with clients on an as-needed basis during paid periods
Do not manage assets
Licensed through particular programs or educational institutions
Compensated through fee-based or hourly arrangements

In the end, there is no ‘one best place’ to go for advice because each personal finance situation can be unique. Further, a potential client’s needs may be transactional (one-time), single-issue, recurring, multi-dimensional—or even unknown at the time of contact with an advisor! The best thing for anyone seeking financial advice to do is to interview more than one professional and type of advisor to determine what could work best for their situation. Asking for an initial (and usually free) discussion from a potential advisor to explain your situation and get the ball rolling is a great start!

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This award was issued on 7/1/24 by Five Star Professional (FSP) for the time period 10/10/23 through 4/30/24. Fee paid for use of marketing materials. Self-completed questionnaire was used for rating. This rating is not related to the quality of the investment advice and based solely on the disclosed criteria. 3270 Houston-area wealth managers were considered for the award; 208 (6% of candidates) were named 2024 Five Star Wealth Managers. The following prior year statistics use this format: YEAR: # Considered, # Winners, % of candidates, Issued Date, Research Period. 2023: 3,347, 179, 5.3%, 7/1/23, 10/10/22 - 5/5/23; 2022: 3215, 176, 5%, 7/1/22, 9/20/21 - 4/8/22; 2021: 3133, 173, 6%, 7/1/21, 9/14/20 - 4/30/21; 2020: 3219, 174, 5%, 7/1/20, 9/30/19 - 4/17/20; 2019: 2992, 209, 7%, 7/1/19, 10/15/18 - 4/26/19; 2018: 3114, 218, 7%, 7/1/18, 10/27/17 - 5/21/18; 2017: 2000, 228, 11%, 7/1/17, 10/24/16 - 5/24/17; 2016: 1763, 437, 25%, 6/1/16, 10/16/15 - 5/16/16; 2015: 2289, 408, 18%, 7/1/15, 10/16/14 - 5/16/15; 2014: 3958, 410, 10%, 7/1/14, 10/16/13 - 5/16/14; 2013: 3001, 504, 17%, 8/1/13, 10/16/12 - 5/16/13; 2012: 2105, 425, 20%, 7/1/12, 10/16/11 - 5/16/12.

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This article was written by Marco Rimassa, CFP^®, CRPC^®, CFA. It does not constitute an offer or solicitation of any transaction in any securities. Any recommendation contained here may not be suitable for all investors. Although the information contained herein may have been obtained from recognized services, issuer reports or communications, or other services and sources believed to be reliable, its accuracy or completeness cannot be guaranteed. Any opinions, estimates, or projections expressed herein may assume economic, industry, and political conditions and/or current conditions at the time of issuance, which are subject to change.

This information is being furnished for informational purposes only, and on the condition that it will not form a primary basis for any investment decision. Investors must make their own determination of the appropriateness of an investment in any securities based on the legal, tax, and accounting considerations applicable to such investors and their investing strategy.

Wealth managers do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. The award is based on 10 objective criteria. Eligibility criteria - required: 1. Credentialed as a registered investment adviser (RIA) or a registered investment adviser representative; 2. Actively licensed as a RIA or as a principal of a registered investment adviser firm for a minimum of 5 years; 3. Favorable regulatory and complaint history review (As defined by FSP, the wealth manager has not; A. Been subject to a regulatory action that resulted in a license being suspended or revoked, or payment of a fine; B. Had more than a total of three settled or pending complaints filed against them and/or a total of five settled, pending, dismissed or denied complaints with any regulatory authority or FSP's consumer complaint process. Unfavorable feedback may have been discovered through a check of complaints registered with a regulatory authority or complaints registered through FSP's consumer complaint process; feedback may not be representative of any one client's experience; C. Individually contributed to a financial settlement of a customer complaint; D. Filed for personal bankruptcy within the past 11 years; E. Been terminated from a financial services firm within the past 11 years; F. Been convicted of a felony); 4. Fulfilled their firm review based on internal standards; 5. Accepting new clients. Evaluation criteria - considered: 6. One-year client retention rate; 7. Five-year client retention rate; 8. Non-institutional discretionary and/or non-discretionary client assets administered; 9. Number of client households served; 10. Education and professional designations. FSP does not evaluate quality of services provided to clients. The award is not indicative of the wealth manager's future performance. Wealth managers may or may not use discretion in their practice and therefore may not manage their clients' assets. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by FSP or this publication. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by FSP in the future. Visit www.fivestarprofessional.com.