Personal finance can be overwhelming — from tax planning, to investing, to establishing an everyday budget and long-term saving goals. It can take years to learn financial best practices. Luckily, financial professionals have dedicated themselves to just that — so you don’t have to. When you pick the right professional or professionals to work with, you’ll find your financial life becoming much easier to manage.

What are the types of financial professionals?

Financial professionals come in all shapes and sizes. Typically, you choose to work with a financial professional when you need help or guidance dealing with a certain aspect of your financial life. Picking a financial professional can be as complicated as managing your finances.

To see why, see:

• Motley Fool Alphabet Soup of Advisors:
  www.fool.com/personal-finance/general/2004/03/03/alphabet-soup-of-advisors.aspx?source=isesitlnk0000001&mrr=0.33

Luckily, you don’t have to worry about most of those types of financial professionals. Below is a list of the most common and what services they provide.

Attorney

There are many different types of attorneys who can help you with financial-related needs. For example, you can find attorneys to assist you with:

• Real estate
• Bankruptcy
• Estate planning
• Divorce
• Small business
• Elder care and caregiving

Typically, you want to work with an attorney working close to your home — laws vary by state and even municipality. To find qualified and credentialed lawyers in your area, you can visit your state bar association’s website (a web search should help you find it).

Here are a few other resources that might be useful:

• American Bar Association: www.americanbar.org
• National Association of Consumer Bankruptcy Attorneys: www.nacba.org
• American Academy of Matrimonial Lawyers: www.aaml.org
• National Academy of Elder Law Attorneys: www.naela.org

• See also: Caregiving, Wills and estate planning, Getting divorced

Financial planner

Technically, anyone can call himself or herself a financial planner. If your finances are pretty simple, chances are you don’t need to hire a financial planner — there are lots of online resources, personal finance software packages, magazines and self-help books that can help you do your own financial planning. If you feel you need to hire a financial planner for help with more complex personal finance issues, you can see a CERTIFIED FINANCIAL PLANNER™ professional (CFP) who has earned the certification from the CFP Board, or a Certified Public Accountant (CPA) who has earned the Personal Finance Specialist (PFS) credential from AICPA.

Certified Financial Planner™ professional (CFP)

Only those financial planners who have fulfilled CFP Board’s certification and renewal requirements have the legal right to call themselves CERTIFIED FINANCIAL PLANNER™ professional, or a CFP^® professional.

CFP Board currently oversees over 65,000 CFP^® professionals in the U.S. who advise individuals and families on a broad range of personal finance topics, including retirement, budgeting, taxes, investments, estate planning and insurance, among many others. CFP^® certification is renowned for its rigor — it is granted to financial planners who hold a Bachelor’s degree, complete initial and ongoing financial planning education, pass a comprehensive 10-hour examination, attain at least three years of professional experience in financial planning, and agree to provide financial planning services as a fiduciary – acting in the best interests of their clients. CFP Board’s disciplinary enforcement of its ethical standards further distinguishes CFP^® certification from other industry designations.

• CFP Board: www.cfp.net

Certified Public Accountant (CPA)

A Certified Public Accountant is an accountant who has gone through a special licensing program that includes work experience and testing. While that program isn't focused on tax, many CPAs do make tax a priority and most CPA firms prepare tax returns. In particular, CPAs who work with small businesses and individuals are likely to have in-depth knowledge of tax matters. Others strictly work with large corporations, so not all CPA firms offer tax-prep services to people like you.

CPAs are often the tax advisor of choice for those who are self-employed, own small businesses or own rental properties. But they can be of a big help to anyone else with more-complicated tax returns. A good CPA also will provide advice about your business and investments, and tips for tax planning throughout the year.

Some CPAs also hold the Personal Financial Specialist (PFS) credential. This credential from the American Institute of Certified Public Accountants (AICPA) requires a competency test and continuing education in personal-finance matters. A PFS is likely to offer more general financial planning services, not just tax advice.

• See also: Tax professionals
Personal Finance Specialist (PFS)

A Personal Finance Specialist (PFS) is a CPA who holds a PFS credential from the AICPA. A PFS has demonstrated personal financial planning knowledge, skill and experience, as well as passed an exam to earn the credential, which can only be held by CPAs.

• AICPA FAQs on PFS:
  www.aicpa.org/interestareas/personalfinancialplanning/membership/pages/pfsfrequentlyaskedquestions.aspx

Insurance agent

Whenever you take out an insurance policy, you work with an insurance agent to establish the terms of the policy and to be your point-of-contact for claims. Some insurance agencies work like franchises, with local offices established to assist you where you live. Before you select a branch and an individual insurance agent to work with, make sure you do some research to make sure that agent’s credentials are up-to-date. Also remember that insurance agents are first and foremost sales agents, so be careful of relying on them to tell you how much insurance to take out — they may try to sell you a policy that gives you more coverage than you need.

• See also: Health insurance, Car insurance, Life insurance, Homeowner’s insurance, Other insurance

Investment advisor

An investment advisor is an individual or a firm that charges a fee to give investment advice or make investment transactions on behalf of a client. Most investment advisors must register with the Securities and Exchange Commission (SEC) or their state securities agencies in order to practice. Before you choose an investment advisor, make sure to meet him or her face-to-face and ask questions about his or her experience, registrations and credentials.

• SEC Investment Advisors: www.sec.gov/investor/pubs/invadvisers.htm

Registered representative

A registered representative — commonly called a stock broker or account executive — works for a brokerage company that is licensed by the SEC and buys and sells investments on behalf of clients.

• See also: Investment

Tax professional

The first — and for some, only — financial professional that many people hire is a tax professional. A tax professional is a licensed individual or firm that can prepare income tax returns and provide advice about reducing your tax bill. A good one will help you save time and reduce taxes (from deductions and credits you didn't even know about).

• See also: Tax professionals

How do I pick a financial professional?

One way to find a financial professional is to ask someone that you trust if they work with and can recommend someone. Don’t rely on recommendations alone though — your specific financial situation may mean the financial professional recommended to you isn’t the right fit for your needs. Just use personal recommendations as a place to start your search. Before contacting anyone, draw up a list of exactly what it is you're looking for. Personal finance is a very broad area, and someone who can help you with insurance probably doesn't prepare income tax returns, and vice versa. The more specific your list of questions, the easier it will be to identify the types of pros you need to work with.

If possible, interview a few candidates — most don't charge for introductory meetings. Start by asking a few questions:

• What are your credentials?
  Understand which of the licenses the individual holds as well as any special certifications. Don't work with professionals who are unlicensed or inexperienced. And check disciplinary histories to see if there have been any problems with past clients. If you are working with a CPA or attorney, you can easily check your state’s board of accountancy (for CPAs) or state bar (for attorneys) to verify his or her name, credentials, and disciplinary history. The SEC website has sections for looking up brokers and investment advisers. If you are working with a CFP^® professional, you can verify the planner’s credentials with CFP Board and see if your planner has been disciplined for violating CFP Board’s standards of professional conduct.

• What is your approach for a client like me?
  Make sure the services and approach are what you're looking for. Maybe you'd like help with a long-term plan for saving money for retirement, and the guy is talking about the latest hot IPO stocks he got his clients into. Better to find that out right away.

• What services do you offer?
  Financial planners offer different services depending on a number of factors, including credentials, licenses and areas of expertise. Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without proper licenses, or give investment advice unless registered with state or Federal authorities.

• Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?
  Several government and professional regulatory organizations, such as the Financial Industry Regulatory Authority (FINRA), your state insurance and securities departments and CFP Board, keep records on the disciplinary history of financial planners and advisors. Ask which organizations the planner is regulated by and contact these groups to conduct a background check.

• How are you paid?
  Every financial professional is paid in some way, and that expense ultimately comes out of your pocket. Billing methods and rates vary by type of professional and license held. Most attorneys, CPAs, and financial planners, and some tax preparers, work on an hourly-fee basis. Investment advisers charge hourly fees, flat project or retainer fees, a percentage of the assets being managed, or some combination. Stockbrokers and insurance agents are primarily paid by commissions tied to the products that they sell, and there may also be an ongoing payment of some type, as long as you hold the product. Just ask...and be wary if the answer is "you'll pay nothing." Nobody works for free, and it probably means the cost is buried somewhere in the hope you won't notice how much you're really paying.

• Can I have it in writing?
  Ask your planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.

This may seem like a bit much if all you need is a simple tax return prepared, but be sure to spend as much time as needed if you have more complicated things to address. A good financial professional is like that "honest mechanic" for your car—hard to find, but someone you may go back to many times in the future. .

Words to know

Unsure about something you read? Many of the financial terms you came across in this article are defined in our financial glossary. A-Z Glossary

Links we like

Here are a couple online features you might find useful:

• SEC Investment Advisors: www.sec.gov/investor/pubs/invadvisers.htm
• AICPA: www.aicpa.org
• CFP Board: www.cfp.net