Caveat Emptor, Buyer Beware.

Caveat emptor is a Latin phrase that is translated as “let the buyer beware.” The phrase describes the concept in contract law that places the burden of due diligence on the buyer of a good or service.

We want to trust people, and are ok with paying people who know more than we do on certain topics.

But-

The challenge is, how can you "beware" when you don't even know what to be on the look out for? Especially when it comes to our finances. Between social media and podcast gurus, where do you start and who can you trust?

I suggest you start with licensed individuals. I can not tell you how many horror stories I have heard over the years. These stories often involve insurance agents who sell products as investments to unknowing clients who are devastated years later to find their nest eggs are empty.

Let me give you a head start. Below are a list of designations within the investment services field with some short explanations.

You may not finish this article knowing what questions to ask, I will save that for another time. You will however, finish with some base line knowledge of who might or might not be able to give you the help you are looking for.

This is not comprehensive. I tried to tone down my nerd and just give a baseline of how these licenses work. Again, this is just to help you have a place to start when thinking of hiring someone to help with your finances.

Here a few common investment advisor licenses and certifications that financial advisors or financial advisor representatives often hold, along with brief explanations for each:

1. Series 6 - Investment Company and Variable Contracts Products Representative License:

- This license allows holders to sell mutual funds, variable annuities, and insurance premiums. It is commonly held by financial advisors who focus on packaged investment products. Usually payment is issued through standard tiered, one time sales charges set by the industry. The more money you have to invest, the lower your sales charges. Entry point to using this type of advise is typically lower depending on the company.

2. Series 63 - Uniform Securities Agent State Law License:

- Required by many states, this license ensures that holders understand state-specific securities regulations. It must be held in conjunction with other licenses like the Series 6 or 7. Payment is received similar to the Series 6.

3. Series 65 - Uniform Investment Adviser Law Examination:

- This license is required for individuals who provide investment advice for a fee. It allows holders to act as Investment Advisor Representatives (IARs). Fees typically run between 1- 1.2% with additional fees from portfolio managers. If you are paying more than 2% examine that working relationship. Entry point to working with this type of advisor is usually higher depending on the company.

4. Series 7 - General Securities Representative License:

- Often considered the broadest securities license, it permits the holder to sell almost all types of securities, including stocks, bonds, options, and futures. It is essential for many full-service brokers. Usually paid on commission and can also charge other management fees. Entry point is typically higher.

5. Certified Financial Planner (CFP?):

- The CFP? designation requires extensive education, examination, and experience in financial planning. This is the person who might charge your for advice but may or may not actually manage investments for you. Cost varies between $1500 dollars to $3,000 per plan. Fees can be higher depending on complexity. They sometimes also manage your assets and have additional fees for that similar to a Series 65.

6. Chartered Financial Consultant (ChFC?):

- This is a designation, requires coursework and exams covering a wide range of financial planning topics. This designation is beneficial for insurance agents, bankers and estate planners. Some charge in hourly fees, get paid through commission or charge based on a percentage of assets.

7. Certified Public Accountant (CPA):

- While not specific to financial advisors, CPAs often provide tax planning and preparation services, which can be a crucial component of comprehensive financial advising. Many CPAs also pursue the Personal Financial Specialist (PFS) credential to specialize further in financial planning.

These licenses and certifications equip financial advisors with the knowledge and regulatory compliance necessary to offer a wide range of investment and financial planning services.

Hope this helps you on your journey to financial independence.

Love, peace, and financial fitness.

Nakia