They say the first step to solving a problem is admitting you have a problem. If we apply that logic to our finances, then the first step toward our healthy, financial future is recognizing that we, um, have some money troubles. Here’s the thing, though, beyond not overspending and accumulating debt, few of us are taught how to manage our hard-earned dollars. And even those of us who weretaught, well, chances are you also could benefit from some expert advice.
The problems is, who do you ask? Everyone will tell you to “get referrals” for the best tax advisor, financial adviser, etc, etc. This is actually great advice. Referrals are the best way for you to find someone whose expertise is matched to your current sitch. Yet, few of your money-wise friends will explain what exactly any of those money experts do. How can they help you? Are some money experts better suited for your needs than others?
You bet! Ahead, we give a quick breakdown of the different types of money experts.
First, it’s worth noting that there’s no certification or regulation in place determining who gets to call themselves a “financial planner.” It’s one of those terms that other money experts might use to describe their services, but only in conjunction with a specific certification. Be wary of hiring someone who lacks the credentials in the field you’re seeking advice from. The same applies to anyone who calls themselves a “money coach.” Much like “life coach,” in theory, there’s no stopping any regular Jo Schmo from calling themselves that. Your best approach is to ask about their experience dealing in specific area. Ask what sort of accreditation they have, and always ask for referrals.
Certified financial planner (CFP)
This is easily the designation you’ll see most often (CFP), though you might also encounter money experts with other acronyms after their name. Ones like: CPA (certified public accountant), PFS (personal financial specialist), or ChFC (Chartered Financial Consultant). A certified financial planner (CFP), however, gets the green light from the Certified Financial Planner Board of Standards, Inc. Those who’ve earned the certification have demonstrated that they, “have met rigorous professional standards and have agreed to adhere to the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients,” according to the CFP website.
Key among CFP is that they are fiduciaries, meaning they have to work in your best interest. The scope of CFPs is far-ranging. They can advise on everything from taxes to retirement to general help with developing big-picture and day-to-day financial plans. You can also check the CFP database to find out more about local financial planners and what their expertise is.
Sometimes the amount of debt you hold seems sooverwhelming it makes it hard to sleep at night. During times like this, it’s worth considering whether to call a debt counselor. They’re trained to help you assess your current financial situation and provide you with a list of options for tackling your debt methodically. Debt counselors often work with “unsecured debt” like credit cards or personal loans. They’ll work on a debt management plan for you to make the repayment process easier and manageable. “The consumer and the creditors come together through an agency … and collaborate on a plan in which the creditors may be willing to grant some concessions,” Sherry Tetreault, a debt counselor with Clearpoint Credit Counseling Solutions, told Forbes. “Maybe they’ll reduce the interest rate significantly or, in some cases, waive it. Maybe they will stop charging late fees.”
Sure, you could always file your taxes online by yourself. That’s what millions of typical employees do! But, if you’re dealing with anything more complex than the 1040EZ form, it’s worth considering other options. You can also use tax software to help with tax scenarios that are only slightly more complex than working with a W-2 and a few deductions. Consider hiring an accountant, however, if you’re in a situation where you have multiple jobs or own your own business. This is especially important if you have a small business since an accountant can help with payroll, business deductions, and quarterly tax filings, according to Money Crashers.
An investment adviser could be a single individual or a firm whose job it is to advise you on securities (think: stocks, bonds, mutual funds, exchange-traded funds, etc.). They’re the people you reach out to for help when you’re debating whether to invest, purchase, or sell securities. They may also manage portfolios of securities and will typically earn their living in a variety of ways, from a percentage of the value of assets they manage to a commission on the securities they sell. Depending on the size of the securities managed, an investment adviser also might have to register with the SEC or the state securities agency.
We tend to think of attorneys as the kind we see in Law & Order episodes. That is, we think of trial lawyers who spend their time in courtrooms in front of a judge and jury. There are, however, attorneys whose expertise is well-suited for dealing with estate matters and end-of-life paperwork. An estate planning attorney, for instance, can help clients draft legal documents for how to handle their affairs (and money) if they become mentally or physically incapacitated. They can also help with drafting wills or living trusts and advise on how to handle estate taxes, according to Credit.com.