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Have you ever tried to make sense of all the different types of financial services job titles that exist? I hope not… because you’ll find it really makes no sense.

Here are a few titles that come to mind…

    -Financial Representative
    -Financial Advisor
    -Financial Planner
    -Financial Consultant
    -Financial Coach
    -Registered Representative
    -Wealth Manager
    -Wealth Management Advisor
    -Investment Consultant
    -Investment Advisor
    -Investment Advisor Representative
    -Investment Manager
    -Portfolio Manager
    -Insurance Agent
    …And the list could continue on!

Now, it would be one thing if each of these served a different purpose, but typically they don’t. In medicine, for example, it is necessary to have many different types of physician specialties because people have many different kinds of health issues. But in the financial services industry, titles are meaningless for the average consumer. I couldn’t tell you the exact difference between a Financial Consultant and an Investment Advisor, and I’ve worked in the industry for ten years.

Why is This Important For You?

It’s important because this means that, in financial services, you cannot simply go off of a title. Let’s say you are working with a Financial Advisor now. Naturally, most people would assume that a Financial Advisor is someone that helps provide financial advice to their clients. In many cases, this can be wrong. Similarly, you might think a wealth manager is someone that manages investments. Maybe.. but not always.

Making Sense of It

You can essentially break down all “financial services providers” into two categories:

1) Those that are selling
2) Those that are advising

Those that sell (products and services) earn a commission on closed business. Their role is to provide you with good products to fit your needs. Those that advise charge a direct fee to you (fee for service) to provide that advice.

It starts to get a little fuzzy when (let’s call them “Money Guys”) choose to sell products AND advise, and this is quite common. Further, you will rarely hear a Money Guy tell you he/she is in business to sell. They primarily consider themselves advisors, as their title would imply, but in reality the vast majority are selling to make a living.

It’s important to understand how this works to help determine which type of Money Guy is the best for you.

Are you having trouble figuring out how to determine if you’re working with a provider of advice, products or both? You are not alone!

In Reality

You would think this would be easy to figure out, but it is not. The industry calls Money Guys that don’t sell products “fee-only”. CNBC recently published their list of the top 100 fee-only advisors in the U.S. Coincidentally, 9 out of the top 10 are NOT “fee-only” and in reality sell products for commissions. If CNBC is confused, I can’t imagine where most consumers stand.

How Do You Determine if Your Money Guy is Selling Products or Advice?

The litmus test for this is determining how their firm makes money. Search the Investment Advisor Public Disclosure website. Search for the firm name, click on the Investment Advisor Firm link and view their most recent ADV (if the firm is not listed, they are either strictly selling products or you didn’t search correctly). Scroll down and click on Part 2 Brochures on the left title bar. Click on the most recent brochure and read “Other Financial Industry Activities and Affiliations” and “Client Referrals and Other Compensation”. If there is Insurance Compensation, Brokerage Affiliation(s), and/or Broker/Dealer registration listed, they sell products. If there is nothing listed, they sell advice.

For example, check out our ADV here and see for yourself! Look at our “Other Financial Industry Activities and Affiliations” – Nada! We are an advice only firm.

Also, you could ask your potential Money Guy if they are a fiduciary all of the time. If they sell advice, they will say yes. If they sell products, they will say no. If they sell both, they will likely say they can be a fiduciary sometimes.

Advice vs. Products

One is not necessarily better than the other. Personally, the conflict of interest in doing both was challenging for me to manage when I was in the position in my previous job. As an imperfect and influenceable human being, as many of us are, I prefer to keep these things separate (based on my own experience in doing both). For example, don’t hire a accountant that also sells insurance if you are seeking tax advice. Don’t hire a financial planner that sells products if you want financial advice. Don’t hire an advice-only financial planner when you are looking to buy products… Just like you wouldn’t hire a rug salesperson to help decorate your home.

My Personal Experience

As I mentioned, I personally used to be a product AND advice salesperson. The majority of my income came from product sales, however, many of my clients looked to me for advice. It didn’t feel right. Now, we sell advice only.

Have you had any confusing experiences dealing with “Money Guys”? Feel free to share your story!

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