If you are within five to ten years of retirement, the decisions you make now will shape the life you actually live. A qualified advisor helps you get those decisions right. But not all financial advisors are the same. Titles, credentials, and compensation structures vary widely, and understanding those differences is the first step to finding someone who truly has your best interests in mind.
The Main Types of Financial Advisors and What Sets Them Apart
Advisor titles are not standardized or regulated, so they do not tell you much on their own. What matters is the fiduciary standard. A fiduciary is legally required to act in your best interest at all times. Advisors under a suitability standard only need to recommend products considered “suitable,” which is a lower bar. Registered Investment Advisers (RIAs), Like Fairvoy Private Wealth, are held to the fiduciary standard by law, meaning they must prioritize your goals over their own revenue. That distinction matters most when the stakes are high.
Credentials matter too. Look for designations like the CFP®, ChFC®, CPWA®, or APMA®, which require rigorous exams and ongoing education. Fairvoy was founded by Stephen Davis, CFP®, ChFC®, APMA®, recognized as a Forbes Best-In-State Advisor in 2023, and Neal Carroll, CFP®, CPWA®, CPFA®, who brings specialized depth in high-net-worth planning and retirement plan fiduciary services. Both have spent their careers serving clients in the Birmingham area. To learn more about Stephen and Neal, visit our team page here.
How Financial Advisors Are Paid and Why It Matters
Compensation structure shapes the advice an advisor gives. There are three main models:
- Fee-Only: You pay the advisor directly with no commissions, which minimizes conflicts of interest.
- Fee-Based: A hybrid of fees and potential commissions. Ask which products carry commissions and how that may influence advice.
- Commission-Only: No direct charge to you, but the advisor earns each transaction, which can create incentives that do not align with your best interest.
Fairvoy operates on a fee-based model and is committed to full transparency about how we are compensated. Learn more about what you can expect from our team here.
Factors to Consider When Selecting a Financial Advisor
A trustworthy advisor welcomes scrutiny. Watch for these warning signs:
- Vague answers about compensation: You deserve a clear answer about how your advisor is paid. If they cannot provide one, move on.
- Pressure to decide quickly: A good advisor gives you time to think. High-pressure tactics are a sign your interests may not be their priority.
- Guarantees of returns: No one can guarantee investment returns. If someone promises them, walk away.
- No formal written plan: Ad hoc advice is not a strategy. There should be a clear path toward a written, comprehensive financial plan.
- No discussion of taxes: Taxes are one of the largest controllable costs in retirement. An advisor who does not raise tax planning is leaving money on the table.
- Credentials you cannot verify: Check any advisor’s background for free on FINRA BrokerCheck or the SEC’s IAPD database before your first meeting.
Questions to Ask a Financial Advisor Before You Hire Someone
Your first meeting is an interview. Use these questions to evaluate whether this advisor is the right fit:
- Are you a fiduciary at all times, or only some of the time?
- How are you compensated, and do you earn commissions on products you recommend?
- How do you incorporate tax planning into a retirement strategy, and are you familiar with Alabama-specific tax considerations?
- What does your planning process look like, and will I receive a written financial plan?
- How do you adjust portfolios for clients who are close to or already retired?
The Right Advisor Makes All the Difference
Fairvoy Private Wealth is a Birmingham-based RIA built for clients who want more than investment management. We offer integrated tax planning, income strategy, healthcare planning, and estate planning, all under one roof, guided by advisors legally required to put your interests first. Our team brings decades of collective expertise, dedicated to providing personalized care and tailored strategies to help you achieve your financial goals. To learn more about the people behind your plan, visit our team page.
If you are a Birmingham-area pre-retiree and want to talk through your situation with someone who knows this market, we would welcome the conversation.
Disclaimers:
Certified Financial Planner ®(CFP)
The CFP Designation is issued by the Certified Financial Planner Board of Standards, Inc. To earn the credential, each candidate must have a bachelor’s degree (or higher) from an accredited college or university and three years of full-time personal financial planning experience. In addition, candidates must take the CFP Certification examination and complete a CFP-board registered program or hold an accepted designation, degree or license. Every two years, a CFP practitioner must complete a minimum of 30 hours of continuing education. More information regarding the CFP designation can be found at www.cfp.net.
Chartered Financial Consultant (ChFC®)
The ChFC® is offered by The American College. To receive the ChFC® designation, you must successfully complete all courses in your selected program, meet experience requirements and ethics standards, and agree to comply with The American College Code of Ethics and Procedures. Chartered Financial Consultant (ChFC®)) designation is obtained by completing 6 core, 2 elective courses and a final exam for each course. As a prerequisite the IAR must have 3 years of full time business experience within the 5 years preceding the awarding of the designation. This designation requires 30 hours of continuing education every 2 years.
APMA® – Accredited Portfolio Management AdvisorSM
Individuals who hold the APMA® designation have completed a course of study encompassing client assessment and suitability, risk/return, investment objectives, bond and equity portfolios, modern portfolio theory and investor psychology. Students have hands-on practice in analyzing investment policy statements, building portfolios, and making asset allocation decisions including sell, hold and buy decisions within a client’s portfolio. The program is designed for 80-100 hours of self-study. The program is self-paced and must be completed within one year from enrollment.
Continuing Education (CE)
To maintain the APMA® designation, individuals are required every two years to complete 16 hours of continuing education, reaffirm adherence to the Standards of Professional Conduct and comply with self-disclosure requirements.
To learn more about the APMA® designation, visit https://www.cffp.edu/
Certified Private Wealth Advisor® (CPWA)
The CPWA® designation signifies that an individual has met initial and on-going experience, ethical, education, and examination requirements for the professional designation, which is centered on private wealth management topics and strategies for high-net-worth clients. The designation is administered through The Investments & Wealth Institute (“IWI”) formerly known as the Investment Management Consultants Association. Prerequisites for the CPWA® designation are a Bachelor’s degree from an accredited college or university or one of the following designations or licenses: CIMA®, CIMC®, CFA®, CFP®, ChFC®, or CPA license; have an acceptable regulatory history as evidenced by FINRA Form U-4 or other regulatory requirements and five years of professional client centered experience in financial services or a related industry. CPWA® designees have completed a rigorous educational process that includes self-study requirements, an in-class education component, and successful completion of a comprehensive examination. CPWA® designees are required to adhere to the institute’s Code of Professional Responsibility and Rules and Guidelines for Use of the Marks. CPWA® designees must report 40 hours of continuing education credits, including two ethics hours, every 2 years to maintain the certification.
CPFA®– Certified Plan Fiduciary Advisor
Federal law regulates standards of conduct for those who manage qualified retirement plans. Plan advisers who sell and service these plans must act in accordance with these basic fiduciary principles. The Certified Plan Fiduciary Adviser (CPFA®) credential demonstrates an adviser’s knowledge of, expertise in, and commitment to working with retirement plans. Plan advisers who earn their CPFA® demonstrate the expertise required to act as a plan fiduciary or help plan fiduciaries manage their roles and responsibilities.
To attain designation of CPFA®, an individual must:
- Education – The CPFA® Coursework covers four key areas:
- ERISA Fiduciary Roles and Responsibilities
- ERISA Fiduciary Oversight
- ERISA Plan Investment Management
- ERISA Plan Management
The CPFA® exam includes 75 multiple choice questions for which a candidate will have 3 hours to complete.
Continuing Education – In order to maintain credential(s), the candidate must earn 20 CE credits every two-year cycle. Two (2) of the 20 CE credits must be on ethics/professionalism topics.
The 2023 Forbes Next-Gen Wealth Advisors Best-In-State ranking, developed by Shook Research, is based on the period from 6/30/2021 to 6/30/2022 and was released on 4/4/2023. Neither Fairvoy Private Wealth nor any of its advisors pay a fee in exchange for this award. Please see www.forbes.com for more information.