Types of Financial Advisors
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
“Financial advisor” is a term that covers a lot of ground: Asset managers and investment managers, financial planners and financial coaches, and many more. To make it more confusing, some titles are regulated while others aren’t; some require education and licensing, and some don’t, and there are even a few titles that anyone can use.
To simplify it all, below are the most common types of financial advisors, what each one does and how to determine which one is best suited to help with your needs.
The main types of financial advisors
Before we start, a baseline: Any professional who provides financial guidance can call themselves a “financial advisor” without meeting credential or registration requirements.
Some designations, such as Certified Financial Planner (CFP®) and Chartered Financial Consultant (ChFC), do require advisors to meet certain education and operating requirements. Others, such as “financial coach” and “financial therapist” have little to no regulatory oversight and can be used by anyone. We’ll go in-depth on these titles and more below.
Investment advisors
An investment advisor is a person or company that is registered with the Securities and Exchange Commission (SEC) or state regulator and that provides investment advice or manages assets for clients in return for compensation. “Adviser” (with an “e”) is the legal spelling under federal securities law; in everyday use, you may see it written as “advisor” (with an “o”).
Of note: while this term has some regulation, registration as an investment advisor doesn’t imply skill, training or endorsement by a regulatory authority.
Credentials to look for: Check that the individual or firm you’re considering is registered as an investment advisor with the SEC or their state. You can verify this through the SEC's Investment Adviser Public Disclosure (IAPD) database at adviserinfo.sec.gov, and cross-check any related broker licenses at FINRA's BrokerCheck (brokercheck.finra.org). Many investment advisors also hold designations such as a CFP or ChFC (which we’ll get to later on in this list).
Best for: People who want professional investment advice or someone to manage their assets.
Broker-dealers
A broker-dealer is a firm that buys and sells securities such as stocks, bonds and mutual funds, either for clients (as a broker), for their own account (as a dealer), or both. They are also registered with the SEC and overseen by the Financial Industry Regulatory Authority (FINRA).
The financial products that a broker-dealer employee can sell depend on their licenses. For example, someone who has passed the Series 6 exam is limited to selling mutual funds, variable annuities and related products. A Series 7 license allows the person to sell additional securities .
What separates broker-dealers from investment advisers is how they handle conflicts of interest. Registered investment advisers are held to a fiduciary standard under the Investment Advisers Act of 1940, meaning they're legally required to act in their clients' best interest, including a duty of care and duty of loyalty. Broker-dealers follow Regulation Best Interest, which requires them to act in a client's best interest at the point of a recommendation, which is a narrower standard than fiduciary duty.
Credentials to look for: Broker-dealers register with the SEC and are usually FINRA members. In terms of licenses, they may hold a Series 6 and Series 7, which can be verified on FINRA’s BrokerCheck at brokercheck.finra.org.
Best for: People who want to buy and sell specific securities such as stocks, bonds or mutual funds.
Certified Financial Planners (CFP)
A CFP is a financial planner who has met the CFP Board’s training and experience requirements and passed its certification exam. They often handle comprehensive financial planning and often actively manage investments. Some CFPs may specialize; areas of expertise can include risk management, investment, tax, retirement planning and income and estate planning.
Credentials to look for: A CFP designation signals formal training and testing, as well as a fiduciary duty to act in their client’s best interest . A CFP’s license can be verified with the CFP Board.
Best for: Complicated or ongoing planning needs and investment management.
» An in-depth guide to certified financial planners, and what they can do
Chartered Financial Consultants (ChFC)
A ChFC is a financial consultant who has completed education requirements similar to a CFP, but their designation is from the American College of Financial Services. Like CFPs, they can also address in-depth financial planning needs, manage investments, and may specialize in certain areas, such as divorce or business planning.
Credentials to look for: ChFCs must adhere to The American College of Financial Services' code of ethics. You can verify a ChFC's credentials with The American College of Financial Services.
Best for: Complicated or ongoing planning needs and investment management.
» A deep dive into chartered financial consultants
Wealth advisors
Wealth advisors (also called wealth managers) typically work with high-net-worth clients, offering holistic planning alongside investment guidance across areas like estate planning, tax help, charitable giving and insurance.
Credentials to look for: This title isn’t regulated, but based on the work performed, it may require the professional to have SEC or state registration. They may also hold a CFP or ChFC designation. Look for a fiduciary, and verify their registration through the SEC's Investment Adviser Public Disclosure (IAPD) database at adviserinfo.sec.gov.
Best for: People with $1 million or more in investable assets, though minimums vary by firm.
Portfolio, investment and asset managers
Asset managers, portfolio managers and investment managers manage client investment portfolios. Some deal strictly with investments, while others also offer broader financial planning.
Credentials to look for: Because they typically give investment advice for compensation, they usually have to register with the SEC or state regulator. Double-check registration through the SEC's IAPD database (adviserinfo.sec.gov), and check BrokerCheck if the manager also holds broker licenses. Some also hold a designation such as a CFP or ChFC.
Best for: People who want a professional to actively manage an investment portfolio.
Financial coaches
Financial coaches are often the most beginner-friendly financial professionals. They typically focus on teaching the basics of financial literacy, such as how to save money or reduce spending. Financial coaches can also help their clients build wealth that an investment advisor may help them manage in the future (financial coaches do not manage investments).
Credentials to look for: Some financial coaches complete training programs with the Association for Financial Counseling and Planning Education (AFCPE). Look for one who holds either the AFCPE’s Accredited Financial Counselor designation or Sage Financial Solutions’ Accredited Personal Finance Coach designation.
Best for: People learning the basics of financial literacy, such as how to save money or reduce spending.
Financial counselors
Financial counselors help clients with budgeting, debt and saving. They often work at banks, credit unions or other agencies. They may also assist with navigating public benefits. The title “financial counselor” isn’t regulated, and it doesn’t guarantee the person has specific training.
Credentials to look for: This title isn’t regulated. Ask about a counselor's background and any other designations they may hold.
Best for: Help with things like budgeting and saving, rather than with investments.
Financial therapists
Financial therapists combine behavioral therapy with financial coaching to help you work through the emotions and mindset behind your money decisions. They recognize that budgeting, saving and investing can trigger difficult feelings.
Credentials to look for: Some financial therapists are certified through the Financial Therapy Association, but it is a title that anyone can use.
Best for: People whose emotions or money mindset get in the way of managing their finances.
Certified Public Accountants (CPAs)
A CPA prepares and files income taxes and typically has deep knowledge of tax law and critical tax changes affecting your situation. They typically don't provide investment advice.
Credentials to look for: A CPA holds a state-issued license earned by passing the CPA exam; some also hold the Personal Financial Specialist (PFS) credential.
Best for: People who need specific tax advice or tax preparation.
Robo-advisors
Robo-advisors are inexpensive, automated investment management services. They use algorithms to build and manage a portfolio of low-cost investments based on your goals, adjusting the mix automatically when needed. There’s typically low human involvement and the minimum investment is small.
Credentials to look for: Robo-advisor firms are registered investment advisers and must register with the SEC or a state regulator . You can verify registration through the SEC's IAPD database at adviserinfo.sec.gov.
Best for: Investment management only.
Finding a professional: Do you want a financial plan, investment management or both?
This is a crucial decision, as it will determine who you hire and how much you'll pay. Financial planners typically provide two core services:
A financial plan. This is a written roadmap covering your goals, savings, debts, taxes, insurance, retirement, estate needs and major life events. This can be a one-time deliverable, or you can refresh the plan on an ongoing basis (potentially once a year) with the advisor.
Investment management. Also called “active management,” this is when the financial planner manages an investment portfolio for you and makes decisions such as buying and trading. For this service, the fee is typically a percentage of those assets every year.
Both. Some advisors offer both of these services by developing a financial plan for you and then carrying it out on your behalf. This is what most advisory firms offer, and is often most suitable for those with complicated finances or who prefer not to manage investments themselves.
Something else. If you need tax help, look for an advisor who specializes in taxes and has a CPA license or other certification to match. If you want non-investment advice, such as estate planning, debt counseling or insurance planning, you may opt to work with a financial planner (including CFPs), consultant (including ChFCs), wealth manager or financial therapist. They tend to offer holistic financial advice. Many of the other titles described above, such as asset managers and robo-advisors, are generally only allowed to give investment advice.
🤔 Can I use AI in place of a human financial planner?
For some basic tasks, yes. AI can be useful for foundational knowledge and low-risk tasks, such as sketching a budget or doing a quick estimate. However, AI tools are not fiduciaries, so they have no legal obligation to act in your interest and aren't accountable if their information is outdated or wrong. AI can't connect your investments, taxes, insurance and estate decisions to your larger financial future the way a human planner can. Human advisors may offer advantages in navigating complex, emotional and/or private situations, such as a divorce, inheritance or selling a business, though they typically cost more. If all you want is automated investing at a low cost, a robo-advisor is one option worth researching. (Here's our list of the best robo-advisors.)
Which financial planner is the right professional for you?
A financial planner is one of many options when it comes to getting financial advice. Use the below to help decide the best person for your needs:
If you primarily want... | Consider | Why |
|---|---|---|
A full financial plan and / or someone to manage your investments | A financial planner with a CFP or ChFC designation | Trained to handle goals, investments, taxes, insurance and retirement together. CFPs are fiduciaries when providing financial planning. |
Hands-off investment management at a low cost | A robo-advisor | Algorithms build and manage the portfolio. Generally low-cost, with small to no account minimums and low expense ratios, but no comprehensive planning. |
Help with budgeting, debt or building money habits | A financial coach or counselor | Focus on the basics of saving and spending. They usually don't manage investments and may cost less than a financial advisor. |
Tax preparation or specific tax advice | A CPA | Deep tax expertise. Most don't provide investment advice, unless they are also an RIA. |
What to explore next:
Ready to find a financial advisor? NerdWallet's guide to selecting (and vetting) financial advisors.
Prepare for the first meeting: Get to know a financial advisor with these questions.
Want a list of advisors? Search for a financial advisor near you