The financial industry offers a variety of roles for people who want to help individuals and businesses manage their money and achieve their financial goals. It is important to know the difference to determine what type of advisor is best for your needs. Here is a breakdown of some of the common terms you will find in your search for financial guidance:
Registered Investment Advisor (RIA): An RIA is a professional who provides investment advice and portfolio management to clients for a fee. RIAs are regulated by the Securities and Exchange Commission (SEC) or state securities regulators and must follow a fiduciary standard, which means they have to act in the best interest of their clients. RIAs typically work with high-net-worth individuals or institutional investors.
Financial Coach/Money Coach: A financial coach or money coach helps clients improve their financial habits, behaviors, and mindset. Financial coaches do not provide specific investment advice or sell financial products but focus on educating and empowering clients to make better financial decisions. Financial coaches may work with individuals or groups, online or in person.
Retirement Planner: A retirement planner helps clients plan for their retirement goals and needs. Retirement planners may advise on saving, investing, budgeting, taxes, Social Security, pensions, annuities, and insurance. Retirement planners may have different certifications or designations, such as Certified Financial Planner (CFP), Chartered Retirement Planning Counselor (CRPC), or Retirement Income Certified Professional (RICP), among other available designations.
Wealth Manager: A wealth manager is a professional who provides comprehensive financial services to affluent clients. Wealth managers may offer advice and guidance on investment management, estate planning, tax planning, philanthropy, risk management, and banking. Wealth managers may work for banks, brokerage firms, or independent firms.
Investment Advisor: An investment advisor is a professional who provides investment advice and portfolio management to clients for a fee. Investment advisors may be registered with the SEC or state securities regulators or exempt from registration if they meet certain criteria. Investment advisors may work for firms or as independent contractors.
Stockbroker: A stockbroker is a professional who buys and sells stocks and other securities on behalf of clients for a commission. Stockbrokers are regulated by the Financial Industry Regulatory Authority (FINRA) and must pass exams such as Series 7 and Series 63. Stockbrokers may work for brokerage firms or as independent agents.
Insurance Agent: An insurance agent sells insurance products to clients for a commission. State insurance departments regulate insurance agents and must be licensed in the states where they operate. Insurance agents may work for insurance companies or as independent brokers.
Accountant: An accountant is a professional who prepares and analyzes financial records for individuals or businesses. Accountants may perform tasks such as bookkeeping, auditing, tax preparation, financial reporting, and consulting. Accountants may have different certifications or designations, such as Certified Public Accountant (CPA), Certified Management Accountant (CMA) or Enrolled Agent (EA).
Robo-advisor: A robo-advisor is an online platform that provides automated investment services to clients for a low fee. Robo-advisors use algorithms and technology to create and manage portfolios based on the client’s risk profile, goals, and preferences. Robo-advisors may offer features such as rebalancing, tax-loss harvesting, and access to human advisors.
Some of these roles are not mutually exclusive, meaning that a professional may perform multiple roles or offer more than one service to their clients. For example, an RIA may also be a retirement planner or a wealth manager, depending on their qualifications and scope of practice.
