Choosing the Right Financial Professional: What You Need to Know

Many people are overwhelmed by the sheer variety of financial professionals available today. It’s a common question, one I often hear during conversations with friends, colleagues, or my community:

“Norris, it seems like there are so many different types of financial advisors out there and they all have different ways of working with their clients and different fee structures.  How do I decide which one would fit with my situation the best?”

Choosing the right financial professional can indeed feel daunting, but the decision ultimately comes down to two things: their expertise and whether their values align with yours. The right advisor will not only have the credentials but will also listen to your goals and craft a strategy tailored to you. 

To help simplify the process, here’s an overview of four common types of financial professionals and how they might fit your unique situation. We’ll break each one down, highlight their strengths, and help you identify which might align best with your financial goals. 

Types of Financial Professionals and How They Work 

1. Financial Planners or Fee-Based Only Advisors 

These professionals typically come with a Certified Financial Planner (CFP) designation, which means they’ve completed rigorous training. They offer objective advice focused on crafting a comprehensive financial plan. 

Often they charge a flat fee for a plan or by the hour, but if they have other licenses and are affiliated with a Registered Investment Advisory firm, they may forgo those fees in exchange for bringing a minimum number of assets to their firm to manage on an asset-based fee arrangement.  This is also known as an Investment Advisor. 

This type of financial professional is most often suitable for more complex situations where a person may have multiple types of assets such as businesses, real estate investments, privately held investments and so forth.  The typical Planner may require that you have at least $500,000 in assets or are willing to pay them $5,000 / year for their services. 

• How They Work: 
• Analyze your finances and provide tailored advice about budgeting, investing, retirement, and more. 
• Charge either a flat fee, hourly rate, or a percentage of the assets they manage. 
• Some require a minimum portfolio size (e.g., $500,000) or an annual fee for their services. 

• Best Fit For: 
• Clients with more complex financial situations (e.g., owning multiple businesses, real estate investments, or private assets). 
• Individuals looking for holistic, long-term strategies beyond investment management. 

• Additional Note:
  Being that they are “Fee-Based Only”, if they do recommend you need life insurance or annuities in your plan, they will often refer that business out to a experienced life insurance advisor.  However, the life insurance industry has evolved, and it is possible they could sell you a fee-only permanent life insurance product or annuity. 

• Key Benefit: They focus primarily on financial planning, taking a big-picture view of your entire portfolio. 

2. Investment Advisors 

While they share similarities with financial planners, Investment Advisors are often more focused on asset management and may not hold CFP credentials. Instead, they’re licensed to offer investment advice, usually through a Series 65 or 66 designation. 

This professional is often most suitable for someone who has a larger account of investment assets and is only looking for investment management with financial planning being a smaller need. 

If they offer financial planning services, it may be at an additional cost to their investment management or if their asset management fee is higher for their lower minimum asset size, they may include the financial planning services for free.  

• How They Work: 
• Focus on growing your investments and managing their performance. 
• Often charge a fee based on a percentage of your investment portfolio under their management. 

• Best Fit For: 
• Investors with significant assets (though often less than what a financial planner requires as a minimum). 
• People looking for someone to actively manage their stocks, mutual funds, and other investment accounts. 

• Additional Details:
  Some may also offer financial planning services for an added fee or bundle it with their investment services. 

• Key Benefit: Ideal if your primary concern is growing and optimizing investment returns. 

3. Financial Advisors (Commission-Based) 

These professionals typically are at the start of their careers, offering helpful advice on investments, insurance, and retirement plans.  Rather than work for a fee, their licenses allow them to work on a commission basis. 

Financial Advisors can be hugely instrumental in helping people get a financial plan started and the education you may receive could very well be worth the seemingly higher costs.  If you are just getting started with your financial plan and are at the beginning of building up your nest egg, this professional will help you regardless of your asset size. 

Their compensation comes in the form of commissions rather than flat fees or asset-based charges.  For example, commissions for investments are taken from the point of the transaction, so if they recommend you buy a mutual fund and the fund has a 5.5% up-front commission (load), then for every $100 you invest, you will see $94.50 go into your investment.   

When trading stocks, they may charge 1.5% for a purchase and 1.5% for a sell of a stock.  If they sell you an annuity or life insurance product, they have the option to pick their commission structure and you will not see any commission being taken out of your investment or premium, but rather you will pay higher annual fees. 

• How They Work: 
• Earn through commissions for each financial product they sell, like mutual funds, insurance, or annuities. 
• May also charge transaction fees for stock or fund trades. 
• Best Fit For: 
• Those starting out with smaller investment portfolios or initial financial needs. 
• Clients who’d like guidance without committing to ongoing larger asset-based fees. 
• Additional Note:
  While commissions are typical, these advisors can provide invaluable education to clients who are new to investing. 

Key Benefit: They make financial advisory services accessible, especially for beginners. 

4. Hybrid Investment Advisors 

This newer category blends elements of both fee-based and commission-based models. A hybrid advisor offers flexible payment options, adapting to your financial goals and circumstances. 

This professional will help you in the capacity of a fee-based advisor OR a commission-based advisor.  They typically have core values such as helping all families grow their wealth regardless of their net worth. 

A quality Hybrid Investment Advisor should assess your situation, go through a cost benefit analysis with you to help you decide which path is best for your situation, and then provide you with options that you may choose from regarding their fee/commission structure. 

• How They Work: 
• Provide both fee-only and commission-based services, depending on the product or service you need. 
• Options may include flat fees for financial plans or commission-structured investments. 
• Best Fit For: 
• Clients who want flexibility in how they pay for financial advice. 
• Families who are just starting out and need achievable, cost-effective strategies. 
• Additional Note:
  A good hybrid advisor will weigh your options together, guiding you through the cost vs. benefit of fee versus commission. 

Key Benefit: Flexibility and personalized recommendations tailored to what makes the most sense for you financially. 

What Should You Look for in a Financial Advisor? 

All of these professionals are required to act in your best interests even if they are not a fiduciary.  Financial Advisors are the only ones listed above who are not required to act in the capacity of a fiduciary, but recent law changes have brought them more in line with the role of a fiduciary by creating a conduct of acting in the best interest of the client in all situations. 

When choosing a financial professional, here are a few tips to keep in mind: 

• Alignment with Your Values: Trust and shared goals are crucial. Work with someone who truly understands your vision for the future. 
• Transparency in Fees: Whether it’s flat fees, commissions, or a combination, your advisor should clarify how they’re paid. 
• Experience Level: Credentials like a CFP or well-established licenses demonstrate their dedication to ongoing expertise. 
• Personalized Approach: Every financial situation is different. Find someone who listens carefully and tailors strategies to meet those unique needs. 

Partner with South Platte Investments and Planning 

Navigating your financial future can feel overwhelming, but you don’t have to face it alone. At South Platte Investments and Planning, led by Norris Davis, we’re committed to helping clients create personalized, goal-oriented strategies. 

Here’s what makes us different: 

• Tailored Expertise: From financial planning to wealth management and insurance strategies, we offer strategies for every stage of your financial life. 
• Trustworthy Guidance: We prioritize building real relationships and providing clarity in every financial decision. 
• Flexibility for All Starting Points: Whether you’re just beginning your investment journey or managing a complex portfolio, we work with you to build strategies that align with your ambitions. 

If you’re ready to align your financial planning with your bigger goals, schedule an appointment with us. 

Take Control of Your Financial Future Today 

Trust South Platte Investments and Planning with Norris Davis to help you pursue financial clarity and confidence. Contact us for a free consultation or a second opinion on your financial strategies. 

Schedule Your Appointment Today 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.