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Do you need a financial planner or a financial advisor? Or perhaps a financial consultant? Maybe a financial coach? A CLU or a CFP?

With so many different types of financial professionals out there using so many different titles and having all of these initials after their names, how do you decide who to call when you need some guidance?

For example, let’s say Tom is a friend of yours. He recently married and tells you he needs to buy life insurance to protect his wife financially if he dies prematurely. You happened to have recently purchased life insurance from the same insurance agent and company that sold you your car insurance, so you tell Tom about him.

Later that day, Tom asks his father where he bought his life insurance. Tom’s dad tells him that he bought life insurance through his financial planner and recommends Tom do the same. What’s Tom to do?

There are a lot of Tom’s out there, trying to make sense of who does what and whose advice they should take. Perhaps you’re one of them.

This simple guide will clear most of the fog away for you and give you a better understanding of what certain titles mean, what those initials stand for, and what their value to you as a financial services consumer is.

If this article is going to live up to its name as a “simple guide,” we can’t possibly cover every type of financial professional out there, which is why this list isn’t all-inclusive. So instead, we’ll take a brief look at those that you’re most likely to use some time in the future. Here are five of them.

Certified Financial Planner (CFP)

This is one of the most prestigious positions in the financial services world; the initials alone strike fear into the hearts of life insurance agents competing against them.

A CFP has undergone a very rigorous training program, has the necessary years of experience, and has passed a challenging certification exam to earn those initials. In addition, they are held to high ethical standards, and they have a fiduciary duty to their clients (put clients before commissions).

CFP’s will get to know everything about you financially from top to bottom and then create a financial plan to guide you through areas like budgeting, tax planning, retirement planning, college funding strategies, estate planning, and much more

The vast majority of CFPs are “fee-only” financial professionals. They will charge you a set fee to create your financial plan, which can range anywhere from $500 to $10,000 or more, depending upon the complexity of your situation. They don’t receive commissions from companies by selling financial products, such as insurance or investments, only their fee. This payment arrangement is part of what makes them a fiduciary.

Financial Advisor

The title “Financial Advisor” can be used by just about anyone. Many life insurance agents refer to themselves as financial advisors because of the stigma attached to being a life insurance salesperson.

Some financial advisors will create a financial plan for a client, which can be helpful, but it won’t be as thorough as that produced by a CFP. They’ll charge a small fee for the plan but are primarily compensated by earning commissions on any insurance or investments they sell you.

Most people schooled on the difference between a CFP and a financial advisor prefer to work with a CFP because of the “fee-only” approach. The consensus is that commissioned salespeople are more apt to recommend particular products and amounts that benefit them more than the client. However, this does not hold true for all financial advisors.

Chartered Life Underwriter (CLU)

Insurance agents who want to raise their competency level enroll in the American College and take courses and exams focused on life insurance. This designation is a good indicator that you’re working with an insurance agent committed to their career and who has been trained and tested on advanced insurance products and solutions, like those needed by business owners and wealthy individuals.

Investment Advisor

If you want to talk with someone who can help you invest a lump sum of cash, you may want to meet with an investment advisor. Their role is to provide you with guidance and advice on various investments, including stocks, bonds, and mutual funds.

Just like an insurance agent can call themselves a financial advisor, be aware that stockbrokers often refer to themselves as investment advisors. Their goal is to gather as much money as possible from investors and earn a small percentage on a large amount of money. Some experienced investment advisors won’t work with people who have under $100,000 in investable funds.

Wealth Advisor

These professionals could also be called “advisors to the wealthy.” It’s not unusual for wealth advisors to require new clients to have $5 million to $10 million of investable assets. Though that may seem that their only goal is also to increase assets under management, many wealth advisors also offer other financial planning services.

Wealth advisors help their clients in areas like charitable giving, estate planning, and personal income tax planning. They aren’t usually “certified” financial planners, but offer holistic financial planning services as well as investment guidance.

Certified Employee Benefits Specialist (CEBS)

These specialists help organizations put together benefit plans that will attract and retain employees. They typically work with larger employers designing and implementing benefit plans in the areas of:

To earn the CEBS designation, individuals must complete a five-course curriculum covering the entire spectrum of employee benefits.

Many other financial services professionals you interact with are not detailed here, such as the person who prepares your taxes or the financial coach that helped you set up a budget for the first time. Many don’t have designations, but they’re honest, ethical, and good at what they do.

Final thoughts

Before working with any financial professional, verify their credentials and licensing. There are sites like BrokerCheck or Investor.gov that can provide you with that information.


Having grown up in upstate New York, Bob Phillips spent over 15 years in the financial services world and has been making freelance writing contributions to blogs and websites since 2007. He resides in North Texas with his wife and Doberman puppy.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

Money
Published October 11, 2021