Types of Financial Advisors: Which One is Right for You?

There are many different types of financial advisors.  For new investors finding the right advisor can be overwhelming.  When looking for a financial advisor investors should choose an advisor that can help them achieve their financial goals.  In order to choose the right advisor for your family, you must first understand the various types of advisors.




Many people are confused about what defines a financial advisor.  Financial advisor is a broad term used to describe professionals in the financial field.  A financial advisor is a professional who offers financial advice, products, and services to clients depending on his or her licenses for compensation.
However, the advice, products, and services provided vary greatly depending on the individual advisors’ designation.  A designation is a certification that the individual is an expert in the field he or she specializes in.

It is highly pertinent to select a financial advisor that best suits your individual needs.  When selecting a financial advisor it is crucial to select an advisor with core competencies to match you needs.  For example, if you as an investor have needs in the area of financial planning, you should select an advisor who specializes in this area.


Certified Financial Planner (CFP)


When searching for a financial advisor one of the most sought after designations is a Certified Financial Planner (CFP).  An advisor with a CFP designation is an excellent choice for investors who are seeking broad financial planning advice.  Certified Financial Planners are experts in financial planning.  In order to become a CFP one must pass courses in retirement, taxes, investing, estate planning, and insurance.  In addition, in order to become a CFP an advisor must pass a lengthy exam, which typically takes 10 hours, and is comprised of 285 questions.  Furthermore, the advisor must pass an ethical requirement that is issued by the CFP Board.  Certified Financial Planners are seasoned veterans of the financial industry.  A CFP must spend at least 3 years in the financial industry, or 2 years as an apprentice of a CFP in order to claim the designation.  Investors seeking broad advice related to financial planning should consider hiring an advisor with a CFP designation.


Certified Public Accountant (CPA)


Many investors are unaware of the fact that accountants can be considered financial advisors.  To clarify, a Certified Public Accountant (CPA) can act as a financial advisor in certain regards.  In order to become a CPA an individual must take many business courses in college including:  accounting, taxes, auditing, bookkeeping, and ethics.  After taking all necessary courses, an individual must pass the CPA exam.  Certified Public Accountants can give expert advice in specific financial areas including:  preparing taxes, saving money through tax saving methods, and organizing investments.  A CPA would not be the ideal financial advisor for an investor looking for financial planning or insurance help.  However, many individuals already utilize the services of a CPA when filing their taxes, so asking a CPA’s advice on other tax related questions may be useful and cost saving.


Chartered Financial Analyst (CFA)


Investors looking for an advisor who is an expert in securities should consider hiring a Chartered Financial Analyst (CFA).  A CFA designation is given to an advisor whom has demonstrated their knowledge securities.  In order to become a CFA an individual must take courses related to:  security analysis, economics, portfolio management, accounting, and ethics.  Additionally, a CFA must have passed three exams offered by the CFA Institute.  As well, a CFA must have had at least 3 years of work experience in the field.  Chartered Financial Analysts do not offer financial planning advice.  However, they are excellent sources for investors looking for institutional money management advice, and stock analysis.


Chartered Life Underwriter (CLU)


A Chartered Life Underwriter (CLU) is similar to a CFP.  A CLU will take similar courses as a CFP, but in order to become a CLU there is no comprehensive exam.  Investors may wish to seek financial advice from a CLU if they have needs in insurance or estate planning.  Chartered Life Underwriters are highly skilled in regards to purchasing a life insurance policy, updating a plan, establishing a trust fund, managing an estate, and managing a will.


Enrolled Agent (EA)


An Enrolled Agent (EA) offers services similar to a CPA.  An EA is a tax designation.  Many people consider an EA designation to be less than a CPA designation, because an EA is more restricted in giving financial advice.  An EA can give tax preparation advice, much like a CPA.  However, unlike a CPA, an EA does not have expertise in accounting, bookkeeping, and auditing.  In order to become an EA an advisor must pass an exam administered by the Internal Revenue Service (IRS).  An Enrolled Agent may be a good choice for an investor looking for advice related to:  personal, corporate, and estate taxes.  Also, an EA can be consulted regarding certain IRS rules.


Chartered Investment Counselor (CIC)


A Chartered Investment Counselor (CIC) is a CFA who is working as an investment advisor.  In order to become a CIC and advisor must follow a strict code of ethics, which is associated with them acting as a fiduciary.  A CIC must work for an Investment Advisor Association (IAA) member.  In addition a CIC must have 5 years of experience and recertify as a CIC on an annual basis.  A CIC is a high level expert in portfolio management.  They often manage large accounts and mutual funds.  High net level investors may wish to seek the advice of a CIC if they wish for an experienced expert to manage their account.


Chartered Market Technician (CMT)


A Chartered Market Technician (CMT) caters to a niche of the financial services industry.  A CMT specializes in technical analysis of the market.  In order to become a CMT an advisor must pass 3 exams administered by the Market Technician’s Association.  In addition, they must adhere to a code of ethics.  Chartered Market Technicians are typically employed by hedge funds and money management firms.


Chartered Financial Consultant (ChFC)


A Chartered Financial Consultants (ChFC) is a well-rounded financial advisor who typically offers general financial planning advice.  Chartered Financial Consultants cater to a similar market to that of Certified Financial Planners.  However, a ChFC does not have to pass a comprehensive exam like a CFP.  Chartered Financial Consultants can provide advice on financial planning, estate planning, insurance, investments, and income taxes.


Certified Fund Specialist (CFS)


A Certified Fund Specialist (CFS) is a financial advisor that specializes in mutual funds.  A CFS must pass courses by the Institute of Business and Finance (IBF).  These courses include:  portfolio theory, dollar cost averaging, and annuities.  It is important to realize that a CFS cannot buy or sell mutual funds without a separate license.  Nevertheless, many advisors with a CFS designation are licensed to buy and sell mutual funds.  Investors should consider a CFS if they are seeking advice on selecting a mutual fund.


Chartered Mutual Fund Counselor (CMFC)


A Chartered Mutual Fund Counselors (CMFC) is a mutual fund expert.  In order to become a CMFC an advisor must pass courses related to mutual funds, asset allocation, retirement planning, asset allocation, risk and return, and packaged investment products.  In order to keep the CMFC designation an advisor is required to take Continuing Education (CE) credits.  The CMFC designation is granted by the College for Financial Planning.  Hiring an advisor with a CMFC designation may be a good idea for investors who want to know, which mutual funds are best for their portfolio.


Certified Investment Management Analyst (CIMA)


Certified Investment Management Analysts (CIMA) are advisors who specialize in investments.  A CIMA must pass courses provided by the Investment Management Consultants Association.  These courses cover topics such as:  due diligence, risk measurement, asset allocation, investment policy, ethics, and performance measurement.  In order to be granted the CIMA designation and advisor must work as an investment consultant for 3 years.  Continuing Education (CE) credits are mandatory in order to maintain the CIMA designation.  Advisors with a CIMA designation tend to work for financial consulting firms and handle large portfolios.


Certified Employee Benefit Specialist (CEBS)


A Certified Employee Benefit Specialist (CEBS) is an advisor that primarily works in selling and administering employee benefit plans.  A CEBS is often regarded as having subset knowledge of a CFP.  There is no comprehensive board exam, but there are several required courses in order to gain this designation.  A CEBS must pass courses on retirement, insurance, pension, and regulatory issues.  An advisor with a CEBS designation is useful when discussing employee benefits such as 401ks and health insurance.




There are many different certifications for financial advisors.  Many financial advisors choose to receive designations in the field that they specialize in.  Financial advisors are similar to doctors in regards to operating in niche markets or areas of specialty.  For example, a doctor may choose to be a neuro surgeon, a pediatrician, or an anesthesiologist.  Moreover, financial advisors may choose to specialize in areas such as financial planning, employee benefits, or taxes.

In order to choose the right financial advisor, investors should consult with a prospective advisor prior to hiring them, about which areas they specialize in.  It is of the utmost importance to hire an advisor whose core competencies can match the investor’s financial needs.  In simpler terms, it is important to make sure that an advisor is knowledgeable in a certain area, so that they can adequately address your needs.

When choosing a financial advisor it is important to find someone that is right for you.  There needs to be the right fit in order to facilitate a long lasting relationship.  As an investor you should be aware of the various types of advisors, in order to choose an advisor that matches your core financial needs.


Right Financial Advisor


At Right Financial Advisor we match investors to the right financial professional based on investor needs and advisor competencies.  Additionally, we overlay personality in order to create a better match that can endure many market cycles.  Right Financial Advisor removes the hassle of having to research each and every type of financial advisor designation.  We match you to a qualified and vetted professional who specializes in your area of need.


Right Financial Advisor’s Nick Bredow, contributed this report.


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