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Making investment decisions can be difficult and confusing. Investment procedures are highly technical and decisions need to be based on considerable knowledge. Also, investments are very much affected by the news. Business and current events news has to be digested before intelligent and strategic decisions can be made. Taxes, market knowledge and life goals must also be taken into account when making investment decisions. It is hard for a layperson (like yourself) to become good at making investment decisions. Because of the difficulty involved, your decision to consult with financial professionals when investing money can make a real difference in the quality of the decisions you make.

There are a number of different sorts of financial professionals you should consider speaking with prior to making an investment plan. The three most prominent types are financial planners, attorneys, and accountants.

Financial Planners. A financial planner is a professional who helps you determine your current financial health and who can give you advice on how to achieve your financial goals. The planner's job is to take a holistic (whole-life) approach to your financial health.

Financial planners are employed in many settings, including brokerage houses, banks, accounting firms, etc. They also work in independent practices. Planners may also have different educational and professional backgrounds, and put different letters after their names. Despite their ready availability, it can be a challenge to find a qualified financial planner to help you. Doing your homework is the first step to making an intelligent decision. Below is a list of the different types of financial planners and what the letters after their names mean.

  • Certified Financial Planner (CFP). The CFP designation is the top of the line (the most prestigious) in terms of professional designations for financial planners. CFPs must complete three years of work in financial planning, take a course of study, and go through extensive examinations before they can use this title.
  • Chartered Financial Analyst (CFA). CFA is a designation awarded by the Institute of Chartered Financial Analysts to experienced financial analysts who have passed exams in economics, financial accounting, portfolio management, security analysis and standards of conduct. CFAs are mostly institutional money managers or stock analysts.
  • Personal Financial Analysts are people who hold securities licenses and are qualified to give investment advice. This title is alternately used by financial planners that are not CFPs.
  • Chartered Financial Consultants (ChFC) take courses of study on personal finance and must pass qualifying exams.

Shop around before deciding on a financial planner. Get referrals from friends, family, and colleagues. Once you have a few choices, start interviewing. Look for a financial planner with whom you feel comfortable and whose attitude toward investing is similar to your own. Be sure to do a background check to verify your planner's credentials and state licenses (if any apply) before taking their counsel seriously. Take your time and choose carefully as you will probably have a long-term business relationship with your chosen financial planner.

Financial planners generally charge a fixed fee or no fee. Be wary of planners who charge no fee because they direct you towards investments that have up front fees and continuing fees from which they earn commissions. In such cases your best interests are not served.

Attorneys. Attorneys have earned a Juris Doctor (JD) graduate degree. You can think of the JD degree as a "Ph.D. in law". An attorney is qualified to give legal advice, provided that he or she has passed their state licensing (bar) examination. You'll want to find an attorney who specializes in tax law or finance, as not all lawyers have expertise in these areas.

Accountants. Accountants prepare, analyze, and verify financial documents. They also prepare taxes. You will want to seek the aid of a Certified Public Accountant (CPA). CPAs must pass rigorous exams on accounting and tax preparation. But, not all CPA's can give you investment advice. You'll need to find a CPA who is also a Personal Finance Specialist.

Various Brokerage Firms also are in the business of personal financial planning. Be wary of trusting such firms for financial advice, however as many such firms do not always put your interests first. Larger firms often are divisions of Investment Banks and tend to push their own IPO and other securities on smaller clients.

Investment Management Firms serve only wealthy clients. They look for investments of $250,000 or more. These firms generally charge a 1% fee and structure your investments to minimize risk by your orientation as a value or growth investor. Additionally they spread risk over 20 or more securities, in effect creating a personalized portfolio of securities for you in the manner of a mutual fund (defined below).