We will discuss what retirement planners do and how they help investors prepare for retirement. In addition, we will talk about other types of investment professionals such as wealth advisors, financial planners and financial advisors, in addition to basic investing philosophy.
What Are Retirement Planners?
Retirement planners are professionals who have experience and knowledge in the field of investment. They specialize in helping investors like you prepare for retirement. Furthermore, retirement planners help to chart a course toward the goal of retirement. They help individuals reach their financial goals so that they don’t have to worry about money when they grow older in retirement.
Many people interchange terminology for retirement planners with other words that are similar. For example, another for retirement planners might be wealth advisors, wealth managers or financial planners or advisors.
What is a Wealth Advisor?
A Wealth Advisor Assists High Net Worth Clients with Managing Investments and Assets
In general, a wealth advisor can be a financial planner, a financial advisor or even retirement planners. Moreover, a wealth advisor may be an expert in the field of finance, with professional certifications and degrees. In contrast, a wealth advisor may also be less experienced.
A wealth advisor can assist individuals, businesses and families with implementation and management of strategies for managing wealth. In many cases, they focus on helping high-net worth clients with things like establishing goals and values, creating a legacy and wise investments.
Some of the topics that a wealth advisor can advise you on include:
- Investment Strategy
- Short and Long-term Investment Planning
- Debt Management
- Saving and Budgeting
- Estate Planning
- Retirement Planning
- Tax Management
- Wealth advisors
A wealth advisor is a general term for a person who provides advice to individuals for how to invest and manage money. There are actually several terms for money managers who help people manage their money and assets. These terms include “wealth advisor”, financial advisor”, “wealth manager”, “retirement planners” and “financial planner.” We’ll discuss the differences between each of these titles and why it matters.
Why Do You Need Wealth Advisors or Retirement Planners?
Navigating the world of investment and finance grows more complicated and difficult each year. Learning how to manage taxes, create wealth, manage investments and estate planning can be a daunting task. It’s much simpler and easier to depend on the expertise of financial planners to accomplish retirement goals.
Retirement Planners Are in High Demand
The US Census Bureau data indicates that there are over 73 million retirement-age people in the United States currently. This number will reach a crescendo in 2030 when all baby boomers reach retirement age. This group of retirees will require assistance with managing their wealth and estates. In addition, working-age Americans will also need help with their finances, paying off debt, retirement and taxes.
A subsection of a wealth advisor group, a wealth manager provides assistance to high net worth clients. Moreover, the name is frequently synonymous with wealth advisor or financial advisor. In many cases, a wealth manager offers the same services to clients as a wealth advisor does. However, a wealth manager focuses on wealth management for clients.
Typically, a wealth manager deals with high net worth individuals and families. The discipline combines several personal finance areas into one group. In addition, the intent of a wealth manager is to grow and preserve individual and family wealth over long periods or generations.
A Loose Group of Financial Professionals Who Represent Different Industries
“A financial planner is a qualified investment professional who helps individuals and corporations meet their long-term financial objectives. Financial Planners do their work by consulting with clients to analyze their goals, risk tolerance, life or corporate stages and identify a suitable class of investments for them.” –Investopedia
In short, a financial planner is a loose group of individuals from different finance industries, like banking, insurance and tax. They help individuals create a plan for long and short term goals. Moreover, financial planners come from different backgrounds and may not have financial expertise like financial advisors or wealth advisors.
Certified Financial Planners (CFP) must study and understand industry accounting and investing principles. Frequently, a CFP must be familiar with software tools and technology related to financial planning.
True Financial Advisors Are Certified Professionals Who Act as Fiduciaries to Clients, Unlike Salesmen
The term financial advisor is one of the broadest terms when describing professionals who give advice regarding money management. They are also sometimes called “investment advisors.” In many cases, the term “financial advisor” is a substitute term for “wealth advisor”, “wealth manager” and “financial planner.” However, there is a difference between the terms.
A financial advisor is considered a true professional in the financial industry. For example, they may be required to pass board exams and have a financial education from an accredited institution of higher learning or university degree. Finally, if the advisor is working with the public at large, they are required to hold a Series 65 license.
The Series 65 license is administered by the Financial Industry Regulatory Authority (FINRA). In order to pass the Series 65 exam, you must gain expertise in topics such as state and federal securities laws and finance rules. In addition, financial advisors must learn about fiduciary obligations and ethical standards relating to clients.
Another license that some financial advisors acquire is Series 7 Certification. Candidates must past the Series 7 exam to qualify for the certification to work with clients in the financial industry.
“A candidate who passes the Series 7 exam is qualified for the solicitation, purchase and/or sale of all securities products, including corporate securities, municipal fund securities, options, direct participation programs, investment company products and variable contracts.”–FINRA Website
Caveat Regarding Advisors and Planners
Beware of Professionals Who Receive Sales Commissions – You Get What You Pay For
One of the ways in which these professional advisors differentiate themselves is how they receive compensation. Some professionals charge an hourly rate for their time or as a fee in the form of a percentage of the account size; whereas, others may receive payment through sales commissions or financial incentives.
Note that commissions or incentives may create conflict with what is in the best interest clients. For example, if your financial planner receives sales commissions on buying/selling stock in your account, he/she may be inclined to more frequently trade stocks in the account. As a result, frequent trading benefits the professional through sales commissions; however, you may be the loser in the end as portfolio performance takes a back seat to trading.
There are a number of different types of investments that are available for investors to choose from. Moreover, technology of the 21st century has made it easier than ever to choose many different investment options. For example, strategic wealth management investments can include things like stocks, bonds and real estate. In addition, there are many new investment opportunities like cryptocurrency and micro investing.
Types of Investments for Strategic Wealth Management:
- Mutual Funds
- Real Estate Trusts (REITs)
- Real Estate (Land/Homes)
- Precious Metals (Gold, Silver, etc.)
- Cryptocurrency (Bitcoin)
Take Control of Personal Finances and Dollar-Cost Averaging
Learning about investing doesn’t have to be complicated. Once you establish your goals and how much money that you want to invest each month, you can then determine what kind of investments you wish to make. However, every adult should learn to budget, save money and pay off debt first. If you have a family, it is critical that you begin planning your financial future.
Many investors use “dollar-cost averaging” as a part of their investment strategy. Dollar-cost averaging is simply dividing up the amount of money you have to invest over a longer time frame. This investment methodology means that you invest the same amount of money each week or month, no matter if the market goes higher or lower. Dollar-cost averaging takes the emotion out of buying stocks.
What is Your Level of Risk?
Active Versus Passive Investing; Aggressive Versus Conservative Investing
First, the major categories of investment include active management or passive management. For example, a portfolio manager can determine what investments are in your fund and make decision for you using passive management; however, active management means that you reserve more control of your investments and perhaps you even use online services to trade individual stocks on a daily basis.
Second, you must determine if you are an aggressive or a conservative investor. Aggressive investing is utilized by those who want to take more risk and capture greater returns. This type of investing is considered acceptable for younger investors and for savvy investors who want to dedicate a small portion of their portfolio to higher risk. Conservative investing is a lower risk style of investing. Returns tend to be lower than the aggressive style, but come with lower risk. This style is best for those that desire lower risk and those who are getting closer to retirement age.
Retirement Planners Wrap Up
As you can see, there are several differences between retirement planners and some of the other terms used for financial professionals. Many of these professionals assist people with money management, however there are some differences. Hopefully, this understanding helps you navigate the financial advisement world better.
Disclaimer: It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.
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