Thanks for coming back for the latest edition of Planning for your Purpose; Telos Financial’s blog where I discuss different topics related to financial planning. Dennis LaVoy is Michigan’s premiere financial advisor serving clients throughout southeast Michigan as well as across the country.
The purpose of the blog is to introduce financial planning concepts and questions I receive from clients that I believe are important. I want to start discussions about that will educate, benefit, and improve your financial life. Ultimately, to help you focus on your telos!
Why do financial folks have a zillion different job titles?
Well, primarily because there’s not universal standardization among the industry. The financial services industry is fairly complicated for a lot of reasons. I think the biggest is just the history of where the industry came from and the product of answering problems as they arise, rather than creating a foundation and building from there.
As an example, a financial professional may work as captive representative with a broker dealer firm. These firms basically provide back office support for advisors. There’s a wide variance in how much support, some allow advisors to select what services they want and what they don’t and some even have advisors brand as the firm – think Raymond James or Edward Jones.
That said, some of those firms will mandate what titles advisors have or may use. If you use an advisor in a bank, they will likely be the Vice President of Money or something more similar. Again, this is often assigned by the bank.
Then there are independent advisors who have far greater control over their particular practice, including flexibility with titles, branding, and product offerings.
So, what’s in a name?
Probably not a lot, unless the advisor is transparent about why the title is what it is or if it’s specifically detailed enough to be self explanatory and not intentionally vague. A title will probably not indicate much as far as experience, skill, or knowledge go.
Financial Panthers, Planners, and Advisors
I’m not aware of anyone who calls themselves a financial panther, though I’ve thought about using it. If you’re not aware, it’s a throw back to a Simpsons’ episode where Homer misunderstands what a financial planner does.
There are some ways to tell what knowledge an advisor possesses. The best and most meaningful way in my opinion is accreditations, credentials, or certifications by third party entities. The most widely recognized and most important in my opinion is the CERTIFIED FINANCIAL PLANNER™ designation (CFP®), awarded by the Certified Financial Planner Board of Standards, Inc. It requires a bachelor’s degree, years of experience, passing an accredited education program, and passing a six hour exam. After you earn it, you have to do regular continuing education and pay (not insignificant) fees to keep it. So, not just anyone can get it and it takes some commitment to keep it. Only about 25% of financial advisors hold this designation. There are many certifications out there that are worthwhile and demonstrate professionalism, you might have to research it to find out if it’s pertinent to you.
College degrees, licenses, and experience may also indicate prowess of an advisor, but it can be harder to tell, since college programs vary, and licenses are bare requirements to operate and may be out dated with current practices.
So, is there anything in a name?
Maybe. . . for me, as a CERTIFIED FINANCIAL PLANNER™ professional, it is important to represent myself as a Financial Planner. In an ideal world, the title would represent the services or knowledge of the professional. Financial Planner. Investment Advisor. Wealth Manager. Financial Coach. President.
I frequently come across folks who don’t understand the differences between this and other titles. I think they should carry some meaning and, in my mind,, here are what they might indicate.
A Financial Planner, specifically, a CFP® designee, possesses knowledge in all areas of financial planning, provides advice based on such, and their primary goal is to give advice within the scope of your whole financial picture. This would include Estate Planning, Tax Planning and Tax Management, Cash Flow Planning or Budgeting, Investment Management, Retirement Planning, Education Planning, Debt Reduction, Risk Management & Insurance Selection, estate settlement, and anything financial related that comes into your life. They would help you plan and make financial decisions with your long term goals in mind. That’s what I strive to do for all of my clients. Please note I’m not an attorney or CPA, so I don’t provide tax or legal advice. I do work proactively with my clients’ CPAs and attorneys to make sure we’re all coordinating our efforts.
An Investment Manager or Investment Advisor in my mind does just that. They would manage your investments, nothing more. So, compared to a financial planner, you’d just cut out all the other planning areas and counseling that comes with that.
A Wealth Manager, similarly, just manages your wealth. In my mind and for the vast majority of folks, it would be the same as an Investment Manager. For some though, especially those who are very high net worth, this would include managing multiple properties, art collections, coins, other non tangible assets. It could entail or require very specific knowledge in these areas outside of more traditional investment vehicles.
Vice President of Whatever at the bank. Again, the title itself conveys very little. It reflects the advisor’s employment or affiliation with a financial institution, but really nothing more. They may have an abundance of experience or very little. You would need to dig deeper into the credentials of the VP to have a better idea as to their background, knowledge, and experience.
While there are not hard and fast rules for what financial advisors must call themselves to align with their services, I think it would help provide transparency if they did. I think it’s important to pay attention to titles and know who you’re working with as well as knowing what services you want to receive before hiring someone to provide advice. Make sure you vet them, research their background, history, education, and make an informed decision.
As always, if I may be of help, don’t hesitate to call me today for an appointment at 734-468-3050, email at email@example.com, or check out my website for more information at www.telosfp.com.
Telos Financial is a Michigan’s financial advisor for high income and high net worth Millennials, Xennials Generation Xers, & young professionals. It is a fee based, holistic financial planning firm located in Plymouth, Michigan serving young professionals and families. Dennis LaVoy, CFP®, CLU® founded Telos and uses his experience and knowledge to help families and individuals in Plymouth, Detroit, Ann Arbor, surrounding areas, and across the country pursue their financial objectives.
The views expressed are my own opinions and do not apply to every situation. Your situation may vary so make sure to consult a professional for advice prior to making any decisions.