Financial advice is one of the most misunderstood aspects of our financial system. While the law has given a broad definition of what financial advice is, it's not always clear whether all conduct of an advisor constitutes financial advice within the letter of the law. If an advisor provides you with financial advice and it turns out to be inconsistent with your needs or goals, then it's probably not a good idea. However, financial advisers can help you achieve your financial goals if you know how to access their resources, what their advice covers, and what they won't (or won't have the time to) tell you. Learn more here about this company.
Before deciding whether to use the services of a financial planner, accountant, or financial adviser, take some time to consider what they can do for you. The first thing to consider is their wealth management service. This means that they help you set aside a portion of your income for retirement, help you save for an emergency, provide insurance protection in the event of loss or damage of property, and so on.
Your second consideration should be whether you want to work with a certified financial planner, CFP, or self-employed consultant. A certified financial planner is someone who has completed a three-year accredited financial education and is board certified. CFPs are not certified financial planners, but have a professional affiliation with a professional association and may have additional training, tools, and information available to them that self-employed advisors do not. Self-employed advisors, on the other hand, typically do not have an extensive wealth management education and instead rely on "snake oil" and word-of-mouth referrals from other self-employed people.
Your third consideration in choosing a financial advisor, your goals, is what type of financial advice will help you reach your goals. Are you looking for assistance with: debt reduction, investing, life insurance, estate planning, retirement, protecting wealth, tax planning, or social security? If so, your advisor must be knowledgeable about the field he or she focuses on. If not, he or she may not be able to help you achieve your goals.
There are also many different categories of financial advisors to choose from. These include traditional financial advisors who provide a range of general financial advice; self-directed investors (who often manage their own portfolio rather than working with a larger firm), and networks (whose business revolves around helping their clients to manage their own investments). There are also government-sponsored agencies that offer standardized financial advice to all types of individuals, such as HERS (Home Affordable Refinance Program) and SFR (Small Business Grant Program). Many people choose to go the self-directed route because they offer a more personalized approach. The lavish green financial advisors always help their clients set up a comprehensive plan. If you decide to go the self-directed route, be sure to find out if your advisor has an extensive education in the area of your investment management concerns.
The final area of consideration when it comes to the definition of financial advice is negligence. No matter how good a financial advisor may be, if he or she does not follow the law in the area of investing, then this constitutes financial advice being inappropriate. For example, it would not constitute financial advice for an advisor to recommend that his client sell his stock options just so he can make a profit off of them. Even though some advisors legitimately keep stocks and options in a fiduciary capacity, this does not mean that they are exempt from following applicable laws. Therefore, if your advisor does not follow these laws, then it constitutes financial advice being illegal.