Tax season is a fine
time to examine your finances, but do you need a broker or a registered
investment adviser? And just what is a CPA? Here’s help.
Note that many
advisers hold more than one designation or have extra qualifications, so it’s
important to find out exactly which services an adviser will provide. Make sure
your choice knows your overall financial situation, tolerance for risk, and
investment objectives. And before you sign on, find out what he or she will charge
(and whether it’s a flat fee or commission).
Do you need a broker or a registered
investment adviser?
Check for disciplinary
information at cfp.net/search, finra.org/brokercheck (or call 800-289-9999),
adviserinfo.sec.gov, or your state’s Board of Accountancy. (For a listing of
state board, go to nysscpa.org/useful_links/state_boards.htm.)
Broker
A person or company
buying and selling stocks, bonds, and other securities for customers, Discount
brokerage firms are usually cheaper than full-service firms, which are likely
to offer more research and services. The sales people who are usually called
brokers are more properly termed registered representatives. (They may also be
called financial advisers – but that’s not the same as investment advisers; read
on.) Before doing business, representatives must have registered with FINRA
(the Financial Industry Regulatory Authority), passed an exam, and been
licensed by a state securities regulator. The products they can sell vary with
the licenses(s) they have.
The sales people who are usually called
brokers are more properly termed registered representatives
Registered investment adviser.
Someone paid for
providing individually tailored advice about securities but not legally the same
as a financial adviser or registered representative. The RIA is registered with
the Securities and Exchange Commission or a state securities regulator. RIAs
may also use other names: asset manager, investment counselor, portfolio
manager, or wealth manager.
Accountant.
Trained to help people
or companies with taxes, financial planning, auditing, and other financial
needs, many states require new accountants to become Certified Public
Accountants: They need to pass a national test and meet education and experience
requirements set by a state Board of Accountancy. A Personal Financial
Specialist is a CPA with specialized training and certification in personal
finance.
Now, they need to pass a national test
and meet education and experience requirements set by a state Board of
Accountancy.
Financial planner.
“They could be brokers
or investment advisers, insurance agents or practicing accountants,” FINRA
says, “or they have no financial credentials at all.” A Certified Financial
Planner has passed a 10- hour professional exam, has at least two year’
financial-planning experience. And has completed an approved course of study or
has certain professional designations or academic degrees.
Financial planner, “They
could be brokers or investment advisers, insurance agents or practicing
accountants,”
Other terms.
For more info, check
FINRA’s database (apps.finra.org/DataDirectory/1/prodesignations.aspx), which
explains more than 90 adviser or planner designations.
