There is no shortage of people with solid job titles who want to help you achieve your financial goals. They call themselves financial advisors, financial planners, money coaches, financial advisors, and financial educators.
How to hire a financial professional?
For consumers who want to hire a financial professional, the cast of characters can be confusing. Barriers to entry vary, with some advisers earning the title of Certified Financial Planner (CFP) by taking a series of rigorous exams or meeting other professional criteria.
Financial educators are marketed to individuals, says Vince Shorb, the National Financial Educators Council CEO, an organization based in Las Vegas, Nevada, that offers financial education and certification programs. They can, for example, give courses on money matters or engage in private practice on the side by teaching their clients how to manage debts, buy a home, or expand their knowledge of investing. They can be present on social media and invite people to sign up for courses on wealth formation or spending control. They might even write a blog. The challenge is to find out what value they can deliver and whether it is worth it.
Check their background, education, and remuneration structure to understand how they run a business. Financial advisors, also known as financial planners or asset managers, offer comprehensive financial planning, investment management services, and products. Some consultants work independently, while others work for financial services companies. Some earn commissions on products sold, others charge assets as a minimum, and still, others accept new customers. You can ask for a percentage of assets under management, a monthly or quarterly deduction, or a flat fee.
In addition to preparing financial plans and managing client investment portfolios, they also take care of retirement provision, tax preparation, and estate planning. They typically do not sell investment products and do not oversee portfolios. Instead, they teach people how to make informed investment decisions so that individuals can decide how to proceed.
Financial educators should not delve into any personal finances, Shorb says. Instead, their lessons should be about groups of individuals for whom money is essential.
Shorts offer Certified Financial Education Instructors (CFEI), a designation that combines money management principles with the practitioners’ pedagogical skills to lead courses for children, high school students, and young professionals. More than 2,000 people have received CFEI references, Shorts said.
By getting their financial education themselves, financial educators could reach the point where they turn to financial advisers, Shorb said. At this point, they may need to see their investments in a tax or insurance company.
The CFP Certificate requires a Bachelor’s degree from an accredited college or university, professional experience in personal financial planning, and training requirements to apply as a CFEI. You must also complete at least 40 hours of coursework and take an exam.
They can solicit business from individual customers, and they are willing to work with nonprofit schools, religious groups, and other organizations. For example, the National Financial Educators Council works with the Minor League Basketball Group, a basketball league, to provide financial education for its professional players.
Our goal is to develop individual skills and knowledge that lead to behavioral changes. Counselors and Financial Educators have one thing in common: They help people achieve their financial goals, says Lori Hendrickson, who runs the certification program at the University of Minnesota Extension Financial Educators. A financial adviser can help you develop strategies for your specific goals.
Hendrickson, an extension educator at Family Resiliency, said those who complete the 10-module course receive a certificate from the university, but that is not associated with any other program. She added that financial educators are getting into the business of distilling the lessons of their own struggles.