Financial Advisors, Financial Planners and Investment Managers

Understanding the differences between financialwith limited investment experience.
advisors, financial planners and investment managersSo where can the average person turn for sound
can be challenging for the average person.thoughtful investment advice? I would highly
Finding a suitable investment professional is not easy.recommend seeking an independent investment
The number of different titles alone is enough to makemanager with considerable analytical and academic
your head spin. But in a nutshell, there are basicallyexperience. In addition to having substantial investment
three different types of investment professionals:experience, an investment manager should either have
financial advisors, financial planners and investmentan advanced degree from a well-regarded school or
managers.be a CFA charterholder. You will, however, have to do
Financial Advisors. These investment professionals,your homework in order to find one of these
also known as brokers, financial consultants, wealthmanagers willing to manage a smaller account.
managers and wealth advisors, are paid primarily to sellWhat to Look For
investment products and services. In other words,1. Independent investment management firms. Money
these professionals are primarily sales people and/ormanagers who are independent have fewer conflicts
relationship managers. A relatively small percentage ofof interest.
these professionals have substantial analytical or2. An investment manager with considerable analytical
academic investment experience. Hence, someand/or academic experience. Managers should be
financial advisors obtain an account and thenCFA charterholders and/or have good academic
outsource the investment management function tobackgrounds.
another department within their firms.3. Portfolio managers who are accessible.
Financial Planners. These investment professionals areCommunication is very important, especially when
also sometimes known as Certified Financial Planners,financial markets are volatile.
wealth managers and wealth advisors. Financial4. Small firms. At a small firm, you generally know who
planners are generalists who help clients by providingis managing your money.
advice regarding investment management, retirement5. Firms with conservative investment approaches.
planning, tax planning, estate planning and other areas.Taking excess risk very often has a negative impact
Some financial planners also outsource a substantialon your portfolio.
portion of their investment management and other6. Portfolio managers who are good listeners. Meetings
responsibilities to other professionals. Some financialwith a manager are important only if the manager
planners do not have very strong investmentlistens to you.
backgrounds. In fact, many financial planners come7. A portfolio manager should have experience in both
from other professions such as accounting, law andgood and bad markets. Down market experience is
sales.especially important, as mistakes can be very costly
Investment Managers. These investment professionals,during bad markets.
also known as money managers, portfolio managers8. Money managers who treat you with respect. A
and investment advisors, traditionally have extensivemanager should never make you feel like you are
analytical and academic experience. Investmentasking a stupid question.
managers often hold advanced degrees and may alsoWho to Avoid
be CFA charterholders. Many investment managers1. Most financial advisors, also sometimes known as
work as investment analysts during the early parts ofbrokers, financial consultants, wealth managers and
their careers and then advance to more managerialwealth advisors.
type roles. Investment managers are normally paid2. Some financial planners. These professionals
primarily to invest money based on the investmentsometimes come from other professions and may
objectives of their clients.have limited analytical or academic investment training.
It is not easy to find a high quality investment manager3. Most accountants offering investment services.
willing to manage assets below $750,000. Today,Some accountants offer their existing clients
some of the larger money management companiesinvestment services despite having somewhat limited
are only willing to manage smaller accounts within ainvestment experience.
cookie cutter framework. Large firms sometimes4. Any investment professional who guarantees
place smaller accounts on models and delegate somereturns.
of the investment management responsibility to people