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What’s In a Name: Financial Planner or Money Manager?

HI4-27-13When should you fire your money manager? That’s a question raised by a number of recent posts on a variety of financial information sites and journals. But as finances become more complex and independent investors attempt to negotiate the landscape of loans, rates and taxes, a more important question for new investors might be, what’s a money manager anyway? And how is that different from financial planners, investment counselors, and other “experts” offering their services?

In his 10 Commandments for Investors, Jason Hartman advises readers to educate themselves and seek advice from qualified professionals who understand and support an investor’s long-term goals. Picking the right advisers, then, begins with understanding what functions these different titles represent.

There’s no real formal definition of any of those titles, and they’re often either conferred by the investment company an individual represents, or self-described. But in general, according to numerous financial management sources, the question of picking the right kind of “manager” or “adviser” hinges on understanding the fiduciary function – whether this individual is legally required to represent an investor’s interests rather than simply offering advice on financial products and services.

In general, financial advisers and counselors work in a variety of financial industries. They might also be called wealth managers, investment brokers or planners, or a variety of similar titles. They may represent investment firms or financial institutions, or work independently Their role should be to provide comprehensive and focused advice in response to an investor’s stated goals and needs –not to take control of investing decisions or dictate the agenda.

Money managers typically serve a more limited function related primarily to managing mutual funds and other types of investment instruments such as trusts and endowments. They’re most likely found in institutions such as banks and investment companies, tasked with representing a client’s interests within a specific financial framework.

Financial experts echo Jason Hartman’s advice. Scams and frauds abound in the realm of financial advising, so it’s essential to educate yourself and clarify your goals and needs. Do you simply need advice on financial products, or someone to legally represent your interest? If the latter, it’s essential, say professionals, to get the designation “fiduciary” in writing.

Whatever the title, it’s important to remember that a financial adviser is an investor’s employee, not the other way around. A trustworthy counselor or manager can help a new investor successfully negotiate the money maze – but only if goals are clear and expectations put in writing.  (Top iamge: Flickr/CatieRhodes)

The Heroic Investing Team

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