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10 Types of financial advisors + how to choose which you need

Personalized guidance to grow your wealth needs the right type of financial advisor. Compare CFPs, investment advisors, robo-advisors and other professionals.

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January 18, 2024

7 min. read

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Key takeaways
  • Certified financial planners (CFPs) are great for comprehensive financial planning for most typical clients. 
  • Not all financial advisors have a fiduciary duty to their clients, and some, like broker-dealers, use their position to sell securities that earn themselves commissions. 
  • Specialty advisors are available to focus on specific needs, like investments or wealth management. 

In this article

      Financial advisors can come with various certifications, credentials, acronyms, and responsibilities. 

      However, there are no requirements that someone who calls themselves a financial advisor undergo training, certification, or upkeep a fiduciary duty to their client. There are limitations to where and how you can practice without certain credentials.

      Knowing what knowledge, specialties, and duties different types of financial advisors have will help you choose the right professional for your goals.

      Learn more about these financial professionals and tips to hire the right advisor below. 

      1. Registered Investment Advisor (RIA)

      Registered investment advisors specialize in security investments (stocks, bonds, mutual funds, etc.). They’re fiduciary advisors required to provide recommendations that align with the client’s best interests, typically registered with the U.S. Securities and Exchange Commission (SEC)

      Beyond investment management, RIA financial services include retirement planning, estate and wealth management, budgeting, insurance, and more. 

      Note that the RIA is a financial firm, not a specific advisor. RIAs hire qualified investment advisor representatives (IAR) to assist clients. IARs will have different expertise and certifications, so research both your RIA and the firm’s IARs when choosing an advisor. You can search online databases to learn more about specific firms and advisors.

      Takeaways:

      • Best for investment strategies – particularly for wealthy individuals
      • Registered advisors with a fiduciary responsibility
      • Full-service financial firm
      List if common financial services including financial planning, investment management, tax strategy, retirement, and more.

      2. Certified Financial Planner (CFP)

      Certified financial planners are fiduciary advisors with a broad range of qualifications to help you form a comprehensive financial strategy. The certification requires years of study and experience to prove fluency in various financial planning services, including tax, retirement, investment, and estate strategies

      These finance professionals are also held to a strict code of ethics that outlines a fiduciary duty to provide honest advice and act in the client’s best interest. Other planners have their own code of ethics, but a CFP’s fiduciary duty sets their standard apart.

      CFPs can help you achieve most of your financial goals. Some CFPs may have specializations like retirement planning or tax strategies, but all of them can help you with large goals like saving for college or adjusting your current budget. 

      Takeaways:

      • Best for large comprehensive financial strategies, like savings goals, budgeting, investment advice, retirement planning, and more 
      • Certified advisors with a fiduciary responsibility
      • Full-service financial advisors
      • Commonly fee-based, though fee-only planners are available

      3. Chartered Financial Consultant (ChFC)

      Financial professionals can enroll in the American College’s chartered financial consultant program to become a ChFC. These advisors complete 27 college credit hours of an integrated financial planning curriculum. They also have to complete continuing education hours to keep the credential. 

      ChFCs are experienced in various financial planning services and specifically train for real-life scenarios like divorce, guardianship, and other situations clients may experience to provide fiduciary support.  

      Takeaways:

      • Best for comprehensive financial planning for life events like divorce, new children, and more 
      • Credentialed advisors who adhere to the American College of Financial Services ethical code
      • Full-service financial advisors

      4. Robo-advisor

      Robo-advisors are accessible alternatives to human advisors and use algorithms to provide recommendations based on your financial situation. They’re good for traditional investments using long-term passive index strategies. 

      A robot points to a line graph next to the stat that robo-advisors chard 0.25-0.5% in annual fees.

      Robo-advisors manage, evaluate, and rebalance portfolios based on modern portfolio theory. Users can access their investments and performance 24/7, but investments are informed by the user’s defined financial goals rather than individual choices. 

      That said, many robo-advisors partner with CFPs and financial coaches to offer human services for a fee. 

      These advisors are also limited in investment opportunities and provide financial services. Robo-advisors are ideal for users with a clear understanding of their current financial status or objectives. 

      Takeaways:

      • Best for accessible, low-cost, and beginner users interested in long-term investments
      • Manage investments with algorithms based on user inputs and modern portfolio theory
      • Provide limited services and customization 

      5. Wealth advisor

      Wealth advisors specialize in financial strategies for high earners and families. Available services vary, including tax planning, investment strategies, and retirement planning. However, these advisors are experts at managing the particular needs and financial regulations of multi-million-dollar investments.

      Wealth advisor isn’t an official designation, but a specialty that CFPs use to brand themselves when they work with high-net-worth clients. 

      Takeaways:

      • Best for affluent clients and multi-million-dollar investment assets.
      • Comprehensive services available based on your wealth advisor’s expertise. 
      • Wealth advisors may or may not have a fiduciary responsibility to clients. 

      6. Investment advisors

      Investment advisors are also called portfolio or asset managers. They focus on managing investments, including client recommendations, portfolio rebalancing, and asset maintenance.

      Portfolio managers include RIA firms and the individual IARs that work for them. Individual investment advisors are also available and must register with either the SEC or the state securities regulator. 

      Takeaways:

      • Best for clients of all sizes focused on investment opportunities. 
      • Investment advisors are required to register with federal or state securities regulators. 
      • These advisors have a fiduciary responsibility to act in the client’s best interest. 

      7. Chartered Financial Analyst (CFA)

      Chartered financial analysts are internationally recognized and highly respected financial advisors certified by the CFA Institute. CFAs maintain some of the most rigorous certification requirements, with expectations that applicants study at least 300 hours a year for three years to adequately prepare for CFA exams. 

      CFAs are experts in investment consulting, portfolio management, and risk management. Because of their high expertise, they’re not as common as CFPs or ChFCs and typically work for institutions rather than independently. 

      Takeaways:

      • Best for multi-million dollar portfolios, corporations, and institutional investors
      • The gold standard of credentialed advisors with extensive training and experience 
      • Specialize in high-level investments, financial research, and complex corporate strategies 

      8. Financial coach

      Financial coaches help educate clients on money matters and provide support to help them develop financial goals and strategies. Coaches aren’t regulated and don’t have any certification, education, or experience requirements, though some coaches are also credentialed financial professionals. 

      Nonprofits may hire or train financial coaches to assist specific communities, like retired military or low-income adults. Independent coaches are also available online and in person. 

      Coaches provide support and education and may help you make a budget or savings strategy. However, they likely won’t help you purchase stocks or create a comprehensive investment strategy. 

      Takeaways:

      • Best for consumer financial education and support 
      • No education or accreditation requirements, nor fiduciary duty 
      • Can support financial goals, but they don’t typically have the knowledge or experience for detailed financial planning

      9. Financial therapist (CFT-I)

      Money sometimes has emotional and mental strings attached that can make financial planning challenging. Financial therapists tend to the thoughts and feelings around money that may affect an individual’s financial well-being. 

      Therapists can assist in financial education, overcoming negative thoughts and barriers to financial management, or addressing problematic behaviors like gambling. The goal is to create a healthy relationship with money and confidence to manage personal finances. 

      Certified financial therapists are trained in financial therapy, financial planning and counseling, and therapeutic competencies. They’re also expected to adhere to the Financial Therapy Association’s Code of Ethics with a fiduciary standard. 

      Takeaways:

      • Best for people with negative financial behaviors or complicated emotions around money 
      • Aim to repair an individual’s relationship with money and improve their financial security 
      • Don’t provide specific financial advice like security investment recommendations 

      How to choose a financial advisor

      The right financial advisor for your situation depends on your current net worth, financial objectives, experience, and budget. CFPs are a good fit for most basic financial needs and comprehensive plans, while an investment advisor may be best for growing your wealth. 

      Explore these considerations when determining who to work with.

      List of fiduciary advisors including certified financial planners (CFP), registered investment advisors (RIA), and chartered financial consultants (ChFC).

      Determine your financial goals

      Do you want budgeting advice to support your savings goals? Or maybe you inherited a large sum of money and need wealth management advice? Your current situation and objectives are among the biggest factors in choosing an advisor, and you can always change advisors as your goals evolve.. 

      • CFPs: comprehensive financial planning 
      • Investment advisors/RIAs: portfolio management and investment guidance with a fiduciary responsibility
      • Wealth management: comprehensive financial planning for high-net-worth families
      • Broker-dealers: buying, selling, and managing investments without a fiduciary duty
      • Robo-advisor: low-cost, passive investments ideal for entry-level investors

      Advisors with specialized certifications can also assist with specific needs like retirement and estate planning. 

      Search registered advisors

      Depending on the type of advisor you’re working with, many have to register either with the SEC or the business’ state securities regulator. They may also have memberships with FINRA, the National Association of Professional Financial Advisors (NAPFA), and other organizations. 

      Search specific advisors and firms with online databases to learn more about their credentials and experience. 

      Consider fiduciary duty

      Many credentialed financial advisors are held to a fiduciary duty or specific code of ethics that requires them to work in the client’s best interest. 

      Some regulations are more vague, like broker-dealers that must provide recommendations that align with your investment goals but may also make recommendations that suit their interests (known as the “suitability standard”). 

      CFPs, investment advisors, and others with clearly defined ethical duties are generally ideal. However, fiduciary advisors may have more limited investment opportunities. So, folks with high risk tolerance or a particular investment goal might be more interested in working with a broker-dealer. 

      Additionally, not all financial services require a fiduciary relationship. Financial therapists, for example, focus on the emotional and psychological aspects of finances rather than specific planning and investment advice. 

      The Playbook take

      Unless you need ultra-specific advice or are working with huge sums of money, a CFP can help you assess your financial situation and form a comprehensive financial strategy. 

      That said, CFPs can be expensive. If you’re ready to take charge of your investments, consider a robo-advisor to automate your investments and maximize your tax efficiency. 

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      About the author

      Theo Katsoulis, CFA

      Head of Investments

      Theo brings an extensive background in Institutional Asset Management. With a B.A. from Villanova University's School of Business, and having passed the rigorous Series 65 and CFA examinations, he brings significant expertise from portfolio management to understanding intricate financial infrastructures. As Head of Investments at Playbook, he ensures consumers receive exceptional diligence and care for their investment portfolios.

      Tanza Loudenback, CFP®

      Editor

      Tanza is a CFP® certificant, writer, and editor. From 2015 to 2021, she was a top-read author and editor at Insider. Her work focuses on helping people make smart decisions with their money and is published by a variety of online publications.

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