Mid-year marks a great time to think if you are ready to start investing or meet with a financial planner. And lucky you: Advisors now come in an unprecedented variety.
So do clients. People used to only seek help from financial pros if they had upwards of several hundred thousand dollars. In slightly more than a decade, that changed.
No matter if you have $1 million or $1,000 to invest, you still enjoy many options. Let’s look at some if you want help with investment planning in 2015:
In-person advisors. Generally, you meet with your financial advisor at least once a year to help you determine how to plan and organize your finances. He or she also helps you with investing: buying, selling and re-balancing your investments.
Broker-dealers buy and sell investments for clients and receive commissions as compensation. Registered investment advisors are in investment consulting, are registered either with the Securities and Exchange Commission or a state securities’ authorities, and may be paid via flat fees or commissions. Fee-only financial advisors (full disclosure: I am one) receive no commissions, trading fees or product reimbursements of any kind.
Among planners’ certifications and designations:
- A certified financial planner (CFP) must take college-level financial planning courses, log at least three years’ experience in financial planning and pass a 10-hour examination.
- A chartered financial consultant (ChFC) studies college-level insurance, estate planning, retirement funding, investments and others subjects in financial planning.
- A chartered financial analyst (CFA) studies security analysis, stocks, bonds, investment management and corporate finance.
In-person financial advisors may be a good fit if you want to delegate the investment planning responsibility; have savings that have grown too large for you to feel comfortable handling it alone; need more attention on goals and strategies; or want a personal relationship with the team that helps oversee your investments.
Digital advisors. A digital advisor works well if are interested in investing and want some professional guidance but aren’t ready for the high minimums most traditional advisors require.
Digital advisors are primarily online and typically work with you through, phone, email, text or video chat. Some such advisories, such as my firm’s new digital sister company Wela, use investment strategies we long implemented in-person with clients.
In addition to the advantages mentioned, digital advisors are also a good fit if you want to create a global view of all your finances and are sure you’ll be comfortable with your interactions being primarily online and mobile.
Robo advisors. Robo (as in “robot”)-advisors are a wonderful option if you want low-cost help investing, want to invest for the long term and don’t need help with other financial decisions.
These companies, similar to digital advisors in that they request that you invest either low or no-minimum amounts, are 100% online and offer little to no human interaction. They aim to charge even less than digital advisors, typically 0.25% to 0.35% of your assets under management each year.
Both digital and robo advisors keep all operations digital, facilitating such low fees. The typical process to open an investment account involves you logging on to the site and filling in a questionnaire on your investment tolerances. You then receive suggestions based on the online advisor’s algorithms.
And remember: There’s no longer any such thing as a one-size-fits-all approach to managing your money.