If you want to work with a financial advisor, it’s easy to get overwhelmed with the many types of advisors available.
Not only are there many types of advisors, but there are different ways advisors earn money. For example, some advisors earn money by keeping a percentage of your profits, and some charge flat fees. Choosing one over the other can save you money, depending on your financial goals and the amount invested.
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Here is a look at several different types of financial advisors and their specialties, as well as more detail about financial advising fees, so you can choose one that makes the most sense for your financial situation.
Financial Advising Fees
Some advisors are fee-only, and some are fee-based. Fee-only means the advisor charges a specific fee to work with them, which might be a monthly fee, an hourly fee or a set percentage of assets under management, such as 1%.
Fee-based advisors can earn money from advising fees and assets under management, too, but these advisors might also earn money from product commissions, like selling insurance.
For some people who don’t want to go to multiple financial professionals for financial help, investment advice and insurance, going to an advisor who does all three can help. Other people prefer to work with fee-only advisors, knowing those advisors won’t be selling products, only focusing on growing their wealth.
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Types of Financial Advisors
There are many types of financial advisors who specialize in different parts of your financial plan, but these are four of the major ones.
CFP
CFP stands for certified financial planner. While many people can call themselves financial advisors, only those who have gone through specific training, have experience and pass the CFP exam can use this designation.
Certified financial planners are well-respected advisors in the industry. Some CFPs are fee-only, and some are fee-based. The CFP code of conduct requires all CFPs to act as fiduciaries, which means CFPs must make decisions that are in the client’s best interest.
Robo-Advisors
Robo-advisors have increased in popularity over the past few years. They are automated and complete investments on your behalf with criteria you set.
Often, robo-advisors come with lower fees, because instead of working with an advisor one on one, you instead allow the robo-advisor algorithm to invest for you based on your goals and risk-tolerance. However, this comes in exchange for the expertise and nuance a human advisor could offer.
Stockbrokers
Stockbrokers are people who purchase stocks, bonds and other investments on your behalf. Brokers have a license to purchase these assets and can work independently or as part of a brokerage firm.
Some, but not all, stockbrokers act as full-service brokers, meaning some also offer financial planning and advice, in addition to completing trades on your behalf.
Financial Therapists
Financial therapists are typically members of the Financial Therapy Association, which has its own set of standards and guidelines that govern how financial therapists interact with and help their clients.
Typically, financial therapists help clients with the emotional aspects of money, like money stress or overcoming other financial challenges. Financial therapists can help people reshape their beliefs about money or stop harmful habits, like spending addictions.
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This article originally appeared on GOBankingRates.com: The Different Types of Financial Advisors and Their Specialties
