Seems like every day that goes by there's another new fancypants name someone is coming up with : Retirement Specialist, Investment Representative, Investment Advisor, Insurance Specialist.
It's all a bunch of crap. Here's how I understand it:
Stockbroker: Registered with NASD and has a Series 7 license.Brokers are salespeople, but they are calling themselves this less and less (confusingly enough they can still be brokers but call themselves financial advisers, investment advisers, or something else). They are not fiduciaries, meaning they are not legally obligated to act in your best interest. They make money on commissions or fees from what they sell. They sell products that may, or may not, meet your needs. They are not financial planners. They may offer you advice to meet your needs, but this is legally supposed to be incidental to their job.
Financial Advisers: Required to be registered as an Investment Adviser with the SEC. They are legally required to act as fiduciaries, meaning they are legally obligated to act in your best interest. They provide big picture financial planning and money management. Compensated by fee and/or commission. Caution: If they are affiliated with a brokerage, they likely will be biased to that brokerage's products. If you want someone to create and execute the plan, this may be for you.
Financial Planners: Required to be registered as an Investment Adviser with the SEC. Also legally required to act as fiduciaries, meaning they are legally obligated to act in your best interest. They provide a complete financial plan, including tax planning, estate planning, and retirement planning. If you are looking to execute the plan on your own, this may be what you want. The key distinction between advisers and planners is advisers create and execute the plan, whereas planners only create the plan and leave execution up to the customer.
Yes, very confusing.
Questions to ask prospective advisers/planners to help clear up the distinctions and to make them squirm a bit (courtesy of Ritter Daniher Financial Advisers):
If the prospective adviser/planner doesn't react negatively to any of these, or brush them off, or try to talk you into not caring about these, it's a red flag.
If prospective adviser/planner can answer all of these openly and clearly and unflustered, that is good.
The most objective, least-potential-conflict scenario is hiring an independent fee-only financial planner (not all CFPs are fee-only, by the way. Yes that makes it more confusing).
The net is it's very confusing to know the difference and who does what, but it is up to you to educate yourself to understand those differences and to know what will fit your needs and what questions to ask.
This is just what I have learned so far and I am only talking out loud here, so don't hold me to any of this. You need to go find out for yourself, my fellow financial traveler