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.

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

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

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

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

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 about budgeting and saving and many banks offer budgeting tools. If feel you need help with more complex personal finance issues and don’t want to work with a CPA or PFS, you can see a Certified Financial Planner (CFP) who has earned a personal finance credential from the CFP Board.

• CFP Board: www.cfp.net

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

How do I pick a financial professional?

One way to find a financial professional is ask someone you trust if they work with and can recommend someone. Don’t rely on recommendations alone — your specific situation financial situation may mean the financial professional recommended to you isn’t the right fit for your needs. Just use personal recommendations for a place to start your search.

When deciding on what kind of professional to work with, 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.

• What will your fees be?
  There's a range of billing methods, so understand what the fees will be. Some base the fee on the number of forms and schedules you file, while others offer a flat rate or work on an hourly basis. If choosing a tax professional, we do not recommend working with a preparer who bases the fee on the size of your refund, which can encourage unethical behavior.

If you are working with a CPA or tax attorney, also check your state’s board of accountancy (for CPAs) or state bar (for attorneys) to verify his or her name and credentials.

No matter where you get a financial professional’s name, ask the questions above to make sure the person has the right fee structure and credentials for your needs. Asking the right questions and getting the right answers is a key indicator of their knowledge and skill level.

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