7 types of advisors
A brief look at 7 common types of advisors and the different types of advice they may offer.
1. Customer service representative
You can often find this type of advisor at the financial institution where you have an account or loan. They usually help with one-time decisions, such as choosing a bank account or credit card. They can also help you compare loan or mortgage options. And they may provide advice on short-term investment products such as savings bonds and GICs.
Customer service representatives usually get a salary from the financial institution where they work, so there’s no direct cost to you for their advice. But the cost of this advice is built into your service fees or the cost of your investment. And these types of advisors can only recommend products sold by the financial institution they work for.
2. Personal banker
Personal bankers work at banks and trust companies. They’re trained to sell investments such as GICs and savings bonds. They may also be registered to sell mutual funds.
Personal bankers get a salary from the bank or trust company where they work, so there’s no direct cost to you for their services. But the cost is built into your service fees or the cost of your investment.
3. Mutual fund representative
Mutual fund representatives are registered to buy and sell mutual funds on your behalf. The companies they work for are registered as mutual fund dealers. Mutual fund representatives are usually paid by the companies whose products they sell. They make money every time they sell a fund. If you decide to buy, the cost is built into the cost of your funds.
4. Investment representative
Investment representatives (commonly known as stockbrokers) are registered to buy and sell a variety of investments on your behalf, such as stocks, bonds, mutual funds, ETFs and closed-end funds. The investment firms they work for (commonly known as brokerage firms) are registered as investment dealers.
They make a commission when they buy and sell investments. You can learn more about how investment representatives are paid in Preet Banerjee’s blog about the commission grid.
5. Investment advisor
This is an advisor who manages your investments for you and can provide investment advice on any type of security. They work for investment firms that are registered as portfolio managers. These firms can be independent or owned by banks. They may deal only with wealthy clients with at least $250,000 to invest.
They may charge a flat fee for their services. Or, they may charge an annual fee based on the size of your portfolio.
6. Financial planner
A financial planner looks works with you to create a financial plan to help you reach your goals. They may advise you on financial planning, risk management, investment planning, tax planning, retirement planning and estate planning.
Financial planners can be paid in different ways. Be sure to ask your planner how they’re paid.
7. Insurance advisor
Insurance advisors are trained and licensed to give advice about and sell insurance. Some specialize in certain products, such as property or life insurance. Others sell a range of insurance products. Some insurance advisors may also be registered to sell investments.
Insurance advisors are usually paid by the companies whose products they sell. They make money every time they sell a policy. If you decide to buy, the cost is built into your insurance payments.