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Financial advisor

A general job title for someone who helps with money and investment decisions; the title alone says nothing about their license, training or duty to you.

What It Means

A financial advisor is anyone who offers help with money decisions such as investing, saving for retirement or planning for a goal. The SEC and FINRA point out that "financial advisor", "financial planner", "financial consultant" and "wealth manager" are generic titles, and people can use them without holding a specific credential. What matters is the registration behind the title: people who sell securities or give investment advice for pay generally have to register as a registered representative of a broker-dealer or as an investment adviser representative.

Try It: What Does That Title Actually Tell You?

Pick a title from a business card and see what it tells you, based on SEC and FINRA investor guides.

What it is

A job title

Anyone can use it without a specific credential. Look up the person's registration before you hand over money.

How People Say It

  • "I'll ask my financial advisor about it."
  • "He calls himself a wealth manager, but what is he registered as?"
  • "Look her up on BrokerCheck first."

The Breakdown

An example. After a promotion, Jen gets a card from a "Senior Wealth Advisor" at a local firm offering a free portfolio review. She likes him, but the title doesn't tell her whether he's licensed, what he's licensed to do, or how he's paid.

Where it goes wrong. Jen's friend handed money to someone with an impressive title and later learned the title was self-chosen and the person had a disciplinary history. Titles like advisor, planner and wealth manager are generic, per FINRA. Designations such as CFP are awarded by private bodies, and FINRA notes they aren't issued or overseen by regulators or required by law.

What Jen checks instead

  1. Search his name on BrokerCheck, which shows whether he's registered to sell securities, give investment advice or both, and lists employment history, licenses, regulatory actions, arbitrations and complaints.
  2. Run the same name through Investor.gov's "Check Out Your Investment Professional" tool.
  3. Request his Form CRS, the short relationship summary firms must give retail investors.
  4. Find out how he and his firm are paid, and whether he acts as a fiduciaryFiduciaryA person or firm with a legal duty to act in someone else's best interest; investment advisers owe this duty to the clients they advise. See more on her account.

What to watch for

  • A title with no registration behind it. That's a reason to stop.
  • Letters after a name. Look up what the designation requires on FINRA's page before giving it weight.
  • Pressure to decide quickly. A good professional lets you check them first.

Good to Know

You can check a professional's registration with Investor.gov's "Check Out Your Investment Professional" search, with FINRA's free BrokerCheck, or through your state securities regulator. FINRA says professional designations are different from registrations and licenses, and they aren't a legal requirement. Some professionals are paid by fees, some by commissions and some by both, and that shapes their conflicts, so ask before you start.

FAQ

What's the difference between a financial advisor and a financial planner?

Both are generic titles that people can use without a specific credential, according to the SEC and FINRA. What they're registered as, and any designation they hold, tells you more than either title.

How do I check if a financial advisor is legitimate?

Search their name on FINRA's BrokerCheck and Investor.gov's "Check Out Your Investment Professional" tool, or contact your state securities regulator. Those show registration, work history and any disciplinary actions.

Is a financial advisor a fiduciary?

It depends on their registration and the service. Investment advisers are fiduciaries under SEC rules, while brokers follow Regulation Best InterestInterest rateThe yearly percentage a lender charges for borrowing money, not counting fees; the APR adds certain fees to show a fuller cost. See more, so ask them which applies to your account.

Do It in Buhata

Notes, Reminders

Keep what you learn about each professional in Notes (Premium), including their registration and how they're paid, and set a Reminder to recheck BrokerCheck each year.

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Related Terms and Categories

  • Fiduciary

    A person or firm with a legal duty to act in someone else's best interest; investment advisers owe this duty to the clients they advise.

  • Fee-only advisor

    An advisor paid only by the client, through hourly, flat, retainer or asset-based fees, who takes no commissions on the products they recommend.

  • Robo-advisor

    An online investment adviser that uses computer algorithms to build and manage a portfolio for you from your answers to a questionnaire.

  • Brokerage account

    An account at a brokerage firm that holds your cash and the stocks, bonds, funds and ETFs you buy and sell through that firm.

  • Financial goals

    Specific targets for your money, such as an emergency fund, paying off a card or a down payment, each with an amount and a date.

Saving and investing basics

Sources

SEC, "Making Sense of Financial Professional Titles"; Investor.gov, "Making Sense of Financial Professional Designations: Investor Bulletin"; FINRA, "Professional Designations and Credentials"; FINRA, "FINRA-Registered Financial Professionals"; FINRA, "Investment Advisers"; Investor.gov, "Check Out Your Investment Professional"; FINRA, BrokerCheck

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