Source for this post: I am an investment research analyst that manages other people's money with proprietary investment strategies for living.

We've been having some posts recently about DIY investing which is a great thing for the people who are willing to put the work into truly learning the art/science that encompasses investing, and a disastrous thing for the majority who will half ass investing the same way they half ass everything else in their lives. This post is for the half assers who still want to be able to enjoy the fruits of a growing economy without dedicating a significant amount of their time and intellectual capital towards pursuing that goal.

To adequately pursue this goal, there are a few things you need to do. First, understand what your financial goals are for the long term and figure out what kind of lifestyle sacrifices you are willing to make in the present in order to have a brighter financial future, (aka, how much fucking money are you willing to save). Second, come to grips that you are going to have to pay a small AUM (assets under management fee) to a financial advisor. Third is where the half part of the half assing comes into play. You need to do your homework and understand the financial industry on at least a barebones level so that way you're not paying some chump who passed one license exam where they only studied for a few weeks and then they get to call themselves a financial advisor(this is a real thing), lucky for you, this post is mostly going to be about helping you navigate the industry.

Disclaimer, I am not going to give you the rundown on how much starting money you need to enter into each one of these shops as a client because that would take more research than I am willing to commit. I wouldn't be hard to find though, just know that some shops will accept you if you have $500 bucks and some won't accept you unless you have $500k. Figure that part out for yourselves.

1.) Different types of advisors and what they can do:

a.) Customer service representative: Usually help with one time decisions such as choosing a bank account or credit card. These people can't really help you with investment decisions.

b.) Personal banker: They can sell you products such as bonds and mutual funds, this will normally be on a commission base. You don't want to go to these people either because you want someone you pay an AUM fee rather than a one time commission for selling you a product.

c.) Mutual fund representative: Pretty much the same as the personal banker except only mutual funds.

d.) Investment representative: These are what the old time stockbrokers have morphed into. If you have a brokerage account at Charles Schwab and call them to buy a stock, one of this dickheads will get on the phone to help you. They don't know shit about shit and they're pushing products for cash.

e.) Investment Adviser: This one and the following one are the important ones that you want to deal with. Investment Advisers will typically manage a portfolio for you and typically work at banks such as Morgan Stanley, Goldman Sachs, Merrill Lynch etc. You typically have to have around 250k to work with these guys as they have access to all the resources from the bank (the research, tech, analysts, etc). Most wealthy people will work with one of these. These guys don't work for commission, they work for a % of AUM, therefore, the more your pot of gold grows the more money they make. Alignment of incentives.

f.) Financial Planner: Whereas an investment adviser will curate a beautiful portfolio for you, they typically don't specialize in the other aspects of your finances such as risk management, tax planning, estate planning, college plans for your kids etc etc. In an ideal situation you would have someone who does it all for you and there are a lot of people out there who are both an investment adviser and a financial planner, you'll typically find those people at independent RIA (registered investment adviser) shops. These guys are great for helping you build that nestegg up and getting you on a solid plan to reach your goals, however, these are also the people you need to be able to do your research on because there are some crackpots in this group. One big way to find out if someone is a crackpot is to see if they're selling you products for commission or if they're charging you a % of AUM. Btw, around 1% annual AUM is industry standard. Do NOT pay above 1.5%. Nobody is worth that money.

g.) Insurance advisor: This is where the water also gets a bit muddy and people get confused. The people who work at New York Life, Prudential, Primerica tend to call themselves financial advisors when they're really life insurance people who also sell investment products. When it comes to insurance, sure, these people are just fine.. although they're typically used car salesman types. However, DO NOT GO TO THESE PEOPLE FOR INVESTMENT ADVICE. A lot of these people don't even make a salary, they simply make commission by pushing you products that you can really go without.

2.) What credentials should I look for as a screener for a competent advisor?

I am going to go in order for most important to least important, if an advisor has these letters next to his name, he knows his shit.

a.) CFA (Chartered financial analyst): This is the gold standard of the financial industry (peep the username). If your advisor has this, he's a fucking boss because this is normally what analysts get. One of the most difficult tests the world has to offer.

b.) CFP (Certified Financial Planner): This is the gold standard for financial advisors specifically. Honestly, if your advisor doesn't have a CFP, don't give him the time of day.

c.) CIMA (Certified Investment management analyst): This is the CFA lite. A good designation when combined with the CFP for an advisor.

d.) CIPM (Certificate in investment performance management): This is a good thing for advisors to have because it will help them analyze if your investments are truly performing well.

e.) CPA (Certified public accountant): This is obviously geared towards taxes, but if your advisor has this combined with one of the other designations, specifically the CFP, they can be excellent for estate planning.

f.) CAIA (Chartered Alternative Investment Analyst): This is the gold standard for analyzing alternative investments (peep username again). Want to invest in real estate, private equity, commodities, structured products etc, this is the designation for that. Advisors typically don't have this but if they do it shows great analytical acumen for an advisor.

There are other designations, but these are the main ones.

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Overall, I hope this is a helpful guide for analyzing the marketplace. Ultimately, a lot of advisors just do the same thing, but that's not necessarily a bad thing. The main thing you want to avoid is paying an idiot for financial advice that doesn't know what the hell to do with your money. If you go to any of the reputable financial institutions/RIA shops that have advisors that charge decent AUM fees and have designations, 99% chance you'll be in good hands.