Millions of Americans are investors. The reality is that many investors also benefit from working with some sort of advisor. However, the landscape of available financial advisors is confusing! Financial advisor, stock broker, financial planner, money manager, wealth manager…who does what and what do I really need? Nearly each of these professionals will refer to themselves as a “financial advisor”. However, there are distinctions. In simple terms:
Money Manager/Stock Broker: Someone who will manage your portfolio and do your investing. They may not offer general financial planning services
Financial Planner: Someone who will review your situation and help with big picture planning like retirement, college funding, wealth transfer, tax planning and insurance. They may not offer investing and portfolio management services.
Wealth Manager: An advisor who can handle both investing and your planning needs. The planning piece should be highly personalized and comprehensive. Wealth Managers also coordinate work with other professional advisors such as attorneys, accountants, trust officers and the like.
National research on women of wealth done by the Family Wealth Advisors Council (of which I am a member) in 2011 revealed that successful women, regardless of marital status, chose a wealth manager over a stock broker or money manager 2 to 1. I’m confident that this finding extends beyond just women investors.
Most successful families and individuals want two things from their financial advisor: investment performance/financial security AND excellent service. It is clear from research and people we have talked to that acceptable investment returns is only part of the equation. The other key component is the quality of the advisor-client relationship.
Russ Alan Prince and Brett Van Bortel conducted research to determine why clients left their advisors and found that the overwhelming reason was a poor service relationship (The Millionaire’s Advisor, 2003).
When evaluating a quality advisor for your needs, it is very important to find someone who is skilled…but that person should also provide excellent service to meet your individual needs.