As you build wealth, you may have considered hiring a financial advisor. Many people don’t know where to start when it comes to choosing one. Take your time and ask tough questions – the decision can significantly impact your wealth.
This is the first in a multi-part series on how to evaluate advisors. Today we start by describing the different types.
🧠 What you need to know
First off, the term “financial advisor” is a catch-all for a professional that may help with one or multiple aspects of financial planning and wealth building. These could include investments, retirement, estate planning, building a financial plan, tax, education savings, and insurance.
Types of advisors
Certified Financial Planners (CFPs): These individuals earn the CFP title and are certified by the CFP Board. Many offer comprehensive financial planning, including retirement, education, estate planning, tax strategies, and insurance needs. They are well-suited for individuals seeking a holistic approach to managing their financial life.
Wealth managers: Catering to high-net-worth individuals, they offer a suite of services that includes investment management, estate planning, and tax planning. Experts in managing complex financial situations, they optimize wealth preservation and growth. Wealth managers don't require specific credentials or certifications, so be sure to verify their background and experience.
Investment advisors: They specialize in investment portfolio management and strategy. They are ideal for individuals looking for personalized investment management advice.
Tax advisors: Specialize in tax planning strategies to minimize liabilities and maximize compliance. They are essential for individuals with complex tax situations, such as business owners or those with significant investments.
Insurance advisors: They focus on risk management through insurance products. They can help with life insurance, long-term care insurance, and disability insurance planning, among other insurance needs, ensuring you are adequately protected against unforeseen events.
Robo-advisors: A largely automated, algorithm-driven digital platform that manages portfolios based on your specified risk tolerance and financial goals. Professionals oversee the models used to manage portfolios. Read more about robo-advisors.
Even with these titles, the selection process can be vague, particularly because a given advisor could overlap in these areas or only cover a subset. This is why it’s so important to interview them thoroughly and ask tough questions so you know they’ll meet your needs.
What's next
In the next issue of The Boost, we’ll start digging into these questions and many more:
- How are advisors compensated?
- What types of products can advisors sell me?
- How often will my advisor provide updates?
- How often will we speak and through what mode of communication?
- Should I expect my advisor to beat the market?
If there is a question you’d like us to address, reply to this email and let us know!
How can Mezzi help?
Whether or not you work with an advisor, Mezzi can help make sure your investments are on track to meet your goals. Specifically, use Mezzi to:
- Maximize tax-saving opportunities across self-managed and advisor-managed accounts
- Monitor and track performance of self-managed and advisor-managed accounts against key benchmarks
- Avoid investments that counteract the investment goals of your advisor-managed accounts, or vice-versa
- Easily share the allocations and holdings in your personally managed accounts with your financial and tax advisors - you can even invite them to collaborate
- Avoid violations of wash sale rules across personally managed and advisor-managed accounts
