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  • Money Positive Team

Types of Financial Professionals and How to Choose One

There’s a lot of financial advice out there, hopefully you’re getting yours from a professional! But which kind of financial professional should you be working with? Who is best suited to your needs? Whether you're a business owner, an individual seeking financial advice, or simply curious this answer can change.

Most people encounter confusion surrounding the terms "financial planner" and "financial advisor." While these terms are often used interchangeably, it's important to understand their nuances. A financial planner, like myself, is a generalist who offers guidance on a wide range of financial matters. On the other hand, a financial advisor typically specializes in investment management and making investment decisions on behalf of clients. Financial coaches, sometimes referred to as money coaches, are professionals who offer guidance on various financial aspects. However, it's important to note that the title of "financial coach" is not regulated, meaning anyone can call themselves one without being a certified fiduciary. While some financial coaches are excellent at what they do, others may inadvertently offer investment advice without the required qualifications. If they are fiduciaries, then they have a legal obligation to act in your best interest. Clarify what being a fiduciary means to them and how they uphold that duty.

Now, when it comes to tax-related questions or issues, this is a different ballgame and it's essential to know who to turn to. Certified Public Accountants (CPAs) are professionals who have passed rigorous exams to earn their certification. They are authorized to represent you before the IRS, making them crucial when dealing with tax-related matters. Make sure you’re working with a qualified CPA or a registered agent (who must have their work reviewed by a CPA) to ensure accurate and knowledgeable tax guidance. Note there is a difference between accountants and v. While both professions involve accounting tasks, accountants typically focus on tax-related matters and financial analysis, while bookkeepers handle day-to-day financial record-keeping and management. For small business owners, maintaining good books is crucial for accurate tax reporting, so consider working with a bookkeeper in addition to your CPA.

When seeking a financial professional, it's crucial to consider your specific needs. If you require assistance with investment decisions, financial planning, budgeting, and debt management, a financial planner or financial advisor could be the right choice. However, if you're primarily focused on tax-related matters, working with a qualified CPA or registered agent is essential.

Once you know who you need to work with, ask them questions! Inquire about their fee structure, how they get paid, and whether they receive commissions or cuts from recommended products or services. Transparency is key in establishing trust and ensuring the financial professional's incentives align with your best interests. You can also do a little research by reviewing their ADV Part 2 brochure, which provides essential information about their qualifications, services, and fee structure (this should be listed on their website). Additionally, don't hesitate to ask for referrals from trusted sources or reach out to professionals like us at Money Positive, who can guide you towards reputable individuals or firms.

Navigating the world of financial professionals can be overwhelming, but understanding the different roles and asking the right questions will lead you to the right expert for your needs. Remember to consider your specific requirements, vet professionals for transparency and certifications, and prioritize working with someone you trust and vibe with. Whether you're a business owner, an individual seeking financial guidance, or simply looking for referrals, reputable professionals are available to help you on your financial journey.

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Disclaimer: This blog post is intended for informational purposes only and should not be considered as financial or investment advice. Consult with a certified professional before making any financial decisions.

This article is based on original advice shared in the Money Positive’s video Types of Financial Professionals and How to Choose One. It was written in blog format with the help of ChatGPT to expedite publishing on our website.



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