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Introducing your financial team

Discussion in 'What is Investing? (START HERE)' started by InvestOpen, Jul 4, 2018.

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  1. InvestOpen

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    Introducing your financial team

    The breadth of the investing landscape can be quite daunting. Whether looking at real estate, stocks, bonds, venture capital, or other instruments, people regularly rely on financial advisors to help them navigate the markets. Financial advisors come in many forms. Most fall into a few select categories that are worth understanding what they provide as well as how they provide their services. There is one key that needs to be understood up front:
    • Fiduciary – While the term isn’t universally applied in all parts of the globe, fiduciaries have compensation structures and obligations (sometimes legally) to provide products or services that are in the best interest of the customer. Those that do not have this designation are not under any obligation work in the interest of the client, and may push products that provide the salesperson or agent with better commissions.
    Financial Advisor: The term financial advisor is used quite liberally around the world. Like the term bureaucrat for any government employee, financial advisors simply provide some service to an individual or group related to finance. These services range from insurance products to stock selection to estate planning. As noted above, any selection of a financial advisor should be undertaken only knowing their compensation structure and obligations to their clients

    Financial Planner: Financial planners generally work on creating a total money management plan for their clients. While most work in the realm of insurance products, many also offer money management and advice for retirement and wealth building assets.

    Accountant: Even though they may not seem like advisors, accountants are actually one of the most common forms. Accountants work with businesses both large and small, as well as individuals to provide accurate advice and preparation on items from taxes to financial performance. They are normally highly regulated with government sponsored certifications that may or may not be reciprocated outside of their certification area.

    Estate Planning: Estate planners work more specifically with individuals to arrange and plan for how to handle assets after a person has died. They provide an extremely important service for individuals over their lifetime in navigating through the legal framework applicable to that person or group, which often changes throughout the years.

    Insurance Agent: Though they can go under different names from financial agent to advisor, insurance agents specialize in providing products from life insurance to disability insurance, as well as a myriad of other options. While insurance may not seem like an investment, having insurance can create a known, consistent expense that avoids large unknown ones in the investment process.

    Fund Advisor: Much less known, these advisors specialize in mutual funds. They provide recommendations as to which funds would work best in a person’s portfolio. Oftentimes these advisors work in conjunction with other financial advisors, or receive this designation along with other ones.

    Chartered Financial Analyst: It’s unlikely you’ll run into a chartered financial analyst providing their services solo. More often, they are the ones who work or manage mutual funds or hedge funds. Unlike most other advisors, these analysts are best equipped provide advice on specific investment selections.

    Stockbroker: While brokers aren’t specifically advisors it’s worth noting their function. Stockbrokers are actually the only ones certified in most places to transact in financial securities or products. Though most people use large institutions like Fidelity or Schwab, individual brokers still exist out there and do provide advisement services to individuals.

    A major part of your team should be someone who advises you on tax and regulations. It's vital you get this person right from the start of your investment journey.

    < Setting Your Financial Goals | Investment tax and regulations >

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