Time to Read: 5 minutes
Once you’ve decided it’s time to get some professional financial help, you may be asking yourself: “Which type of financial professional is best for me?” From a financial advisor to an investment advisor to a wealth advisor, it’s helpful to know the differences between each category of financial experts before committing to a long-term engagement.
Term #1: Wealth Advisor
With more money comes more responsibility, and wealth advisors’ duties are catered specifically to those who have a decently-sized estate, often labeled as high-net-worth and ultra-high-net-worth individuals. In addition to covering the standard offerings of financial planning like retirement, investment advice and budgeting, wealth advisors cover advanced topics like risk management, company stock and compensation strategies, estate and tax planning.
At BWM Financial, we’ve taken it a step further and equipped our team with the Certified Private Wealth Advisor® designation. You can read more about how our team leverages the CPWA® designation to help San Diego executives here.
Term #2: Financial Advisor
The most common term, a financial advisor is someone you helps you with different aspects of your financial life. This might include planning for and transitioning to retirement, investment advice, life insurance, 401(k) plans, IRAs, budgeting and more. Every financial advisor is different in what specific areas they specialize in and what services they provide, so if you are looking for help in one particular area, it is always best to ask. A widely recognized industry designation is the Certified Financial Planner™ (CFP®) designation, which is broad-based in focus.
Term #3: Investment Advisor
An investment advisor is a professional who focuses on just that – your investments. An investment advisor will manage your portfolio with the goal to get the highest rate of return that you can over the long run. Before they begin designing your portfolio, investment advisors should evaluate your current financial picture, as well as determine your optimal risk tolerance, which may involve you filling out a questionnaire.
After discussing your needs and goals with your advisor, they typically will then present an investment strategy tailored according to the unique aspects of your life. Some investment advisors actually manage your money and do the investing for you, other simple “advise” on what you should do, leaving you to implement the strategies on your own.
How to Choose?
Keep in mind, many firms may categorize their own business under more than one of these labels (they might say they are a “financial advisor” as well as a “wealth advisor”. The best course of action is always to contact any financial professional you are interested in working with directly, ask about their level of service, what other types of clients they work with and services they provide.
If you want to learn more about BWM Financial, you can checkout this 7 minutes read, 9 Reasons to Manage Your Wealth with Us: A Better Way.