Posted by: Kimberlee Leonard Comments: 2 0 Post Date: January 25, 2019

Building a Nest Egg: Deciphering Financial Advisors Near You

Let’s be honest: a financial advisor is a fancy term for “financial product salesperson.” Because they are salesmen (and women) they are usually on commission or at least have minimum sales quotas. This is why most people simply don’t trust financial advisors. If you are building a nest egg, you’ll easily get frustrated with the number of financial advisors who want a shot at your money.

Full disclosure: I am a financial advisor. Over the course of my career, I’ve been all sorts of definitions of financial advisor helping people just like you with building a nest egg. I’ve been a FINRA registered Series 6, 7, 63, and 65 representative covering the gamut from mutual fund representative, stock broker, and financial advisor respectively.

Add the life insurance licensing and tax prep that I have done along with working in the banking environment, I think I meet most of the typical definitions you’ll find. I do currently hold a life insurance license and while many use life insurance in retirement planning and building a nest egg, I don’t really consider that a financial advisor. Many of my colleagues will hate me for saying that.

I don’t care.


Because it’s important for you to understand why you might get certain advice from specific types of financial advisors. Go ahead and Google, “Financial advisors near me” and take a close look at what the designations are. It’s enough to confuse even this financial advisor.

What is a Financial Advisor

At the most rudimentary level, a financial advisor is anyone who provides financial services or guidance on financial matters to clients. Great! That leaves a lot to the imagination. After all, this is ONLY your life savings and building a nest egg to retire in comfort.

While more and more firms are hiring only people who at least have a college degree, most of these services don’t require any formal training. You study for a test, pass it and you’re a financial advisor. Many burger flippers are making more than the average financial advisor. I kid you not.

Here are the most common types of financial advisors:

  • Personal banker
  • Mutual fund representative
  • Investment representative
  • Investment adviser
  • Financial planner
  • Insurance adviser

How Financial Advisors Help in Preparing for Retirement

Of these six commonly listed financial advisors, who is the perfect one to help you address your needs for building a nest egg? After all, didn’t that personal banker you were just referred to graduate with your kid two years ago?

Let’s start with what each really does and if there is any cross-over.

Personal Banker

A personal banker works either at a bank or at a trust company. Generally speaking, a personal banker is going to use bank products in providing advice on growing your assets. This means the personal banker is using FDIC insured products such as certificates of deposit (CDs), savings, and money market accounts. They can also offer government savings bonds. They typically have a salary with some type of bonus structure.

Mutual Fund Representative

This is a FINRA regulated financial advisor (Series 6). This person uses mutual funds as the investment vehicle to provide advice on building a nest egg. They are not authorized to sell individual securities such as stocks and bonds. Mutual funds are not FDIC insured. They get paid when you buy a fund.

Investment Representative

This is your FINRA licensed stockbroker (Series 7). This person can use mutual funds, stocks, and bonds to help in building a nest egg or other savings programs. They typically work for brokerage firms and work on commission paid by you when you make an individual trade or buy a mutual fund.

Investment Adviser

This is your FINRA investment adviser (Series 65) who are essentially stockbrokers with the added license to get paid by portfolio assets. That means they don’t charge per transaction but instead charge an annual fee based on your account value. Some charge a flat fee while others charge a percentage. Investment advisers often only work with accounts valued at $250,000 or more.

Financial Planner

Financial planners have a few different designations but these are the line of financial advisers who have had more education in the building of nest eggs. In other words, they went to school and have years of education and training along with extensive testing and continuing education requirements. The most common financial planner designations are the CPA and the CFP. They create the plan with specific goals in mind using tax, investment and estate planning strategies.

Insurance Advisor

Full disclosure that this is my only current designation. Insurance advisors have passed one or more state insurance tests, usually the life insurance agent license at a minimum. They also can have licensing for home, auto, business, and health insurance. This is a state license with no pre-educational requirements. Agents get paid on commission.

A Short Explanation

For those questioning while I have the least credentialed license currently: No, I did not get kicked out of my other licensing. I write full-time now and that one has the least amount of continuing education. I still serve a small group of clients for life and health insurance needs. That simple.

Mixing Up Financial Advisors

It is easy to confuse financial advisors because they all seem to have crossed over in locations without necessarily crossing over with licensing. That means some will be limited in helping you build a nest egg.

For example, you can walk into a bank and that personal banker may be licensed for mutual funds. He might also refer you to the bank-affiliated brokerage firm where a Series 7 or Series 65 financial advisor sit. All of them might have a life insurance license. But these are all maybes.

The same is true with the brokerage firm offering money market accounts and certificates of deposit. Everyone is selling everything. But not every advisor is licensed to, so that might limit the advice you get. Find out who you are dealing with.

Choosing a Financial Advisor

You threw a stick and found 20 people meeting the “financial advisor near me” requirement. Aside from asking them how many times it took them to pass the test and how long they’ve been licensed and for what, you might want to do a little digging.

Perform a FINRA Broker Check

What is a FINRA broker check, you ask? No problem. FINRA is the Financial Regulatory Authority, the national regulatory body that is responsible for licensing and monitoring registered agents of any FINRA designation. If someone has a complaint, you can see it. You’ll see if it was founded or unfounded.

Keep in mind that if anyone is in business for an extended period of time, there is always going to be something. Financial advisors do have a bullseye on their backs. Check to see if there is a pattern. Chances are the bad seeds are booted out long before you meet them. But you never know.

State Insurance Commissioner

Do the same thing with the state insurance commissioner if someone is insurance licensed. You’ll be able to see if they have a valid license, for how long and what their complaint record is. Unlike investments that are regulated on a national level, insurance is regulated by the state. This happens to make it even more confusing when dealing with things like car insurance or homeowners policies.

Narrowing the Field of Financial Advisor Prospects

It’s important to trust the person you are working with above all. This is why many people work with banks. Even though many financial services are not FDIC insured, the idea that the bank is strong and safe translates to the partner advisors. Just make sure you know what side of the bank is the FDIC floor and what side is the non-FDIC floor. They have to designate and disclose when you get an investment rather than a bank product.

Don’t just ask the financial advisor about his experience. Get a good picture of his licensing and his background before licensing. That isn’t to say a newly licensed advisor will do a bad job. It just means you need to find out who his mentor is. I was lucky, I had great mentors – well after that Wolf of Wall Street true story at the start of my career. Let’s just say that even in a small Colorado town, that was a reality for many types of firms in the 90s when I started.

Fortunately, I didn’t like the smell of dishonesty and found a great mentor who was also a CPA and taught me all the right ways to do business shortly after I got licensed.

Here is a quick checklist of what to ask:

  1. What licenses do you hold?
  2. What is your experience?
  3. Tell me about your investment philosophy?
  4. How do you get paid?
  5. What variety of investments could you potentially offer me?

That will give you an idea of who you are dealing with. Really listen and read between the lines. When they give you the five favorite investments, ask them for other options as well. If they have a copy of those one-sheets readily available, chances are you are dealing with a one-offer salesperson. Run!

Make sure you go in with a good understanding of your own goals, no matter who you deal with. Consider what your future is like in an ideal scenario – building a nest egg involves a bit of dreaming and a lot of reality. But start with dreaming. Think about how you would feel if your retirement account fluctuated a little or a lot.

Honestly, insurance agents (like me) who say they are financial advisors (not like me) are giving you part of the story and can really only give you limited options. I happen to be a little luckier in the credibility department because my experience is much deeper and far-reaching in the financial services world. This isn’t to say that you can’t get great advice from an investment advisor who is ONLY licensed in insurance. You can find great products that don’t have a lot of risk perfect for someone who is sick of the stock market.

Just make sure it aligns with your goals and risk tolerance.

At the end of the day, you have to realize that the person is trying to feed their family no different than when you go to work. There are a lot of great financial advisors out there. There are also a ton not well trained who probably can’t manage their own financial future. Turn on your Spidey Senses to feel out whether or not the person “pitching” you truly has your best interest at heart.

If you have questions about where to find the best financial advice for your needs, feel free to drop us a comment or submit a query. We have an extensive network of financial advisors we can introduce you to.

Also, feel free to check out our retirement calculator here.

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Comments (2)

  • Darja Reply

    That’s a very insightful and helpful overview. Thank you for these tips!

    January 27, 2019 at 4:03 am
  • Melissa Reply

    Great information! I never thought of insurance agents as financial advisors and didn’t realize all the ways financial advisors can differ.

    January 27, 2019 at 2:47 pm

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