One of the most frequent requests we receive from investors is asking us to describe the key differences between titles that are used by financial advisors and representatives.
As background, these titles are confusing because the financial service industry wants them to be confusing. Lower quality advisors are more productive when they blur distinctions between themselves and higher quality advisors. If lower quality advisors told the truth you would not buy from them.
Financial Planners – CFPs are best. They provide financial, retirement, college, and estate planning services. Be aware anyone can call themselves a planner whether they have the specialized knowledge or not. A high percentage of insurance agents call themselves planners to lower sales resistance.
Financial Advisors – They provide a number of valuable services, for example asset allocation, manager selection, and performance reporting. They do not pick securities.
Money Managers – They make investment decisions when they make portfolio management decisions. Mutual funds, separate account managers, ETFs, and hedge funds are examples of money managers. They pick securities.
Sales Representatives – They sell investment and insurance products. They are paid commissions by third parties for sales results. Reps are most likely to misrepresent their actual role to reduce sales resistance. They get away with it because pitches are verbal and investors have not learned to require documentation. Investors should trust what they see, not what they hear.
I hope this helps. Its tough when reps have superior sales skills.