Today's challenging investment markets require investors to make smart, rational financial decisions. Investors need to have a well-crafted financial plan, access to high-quality financial and investment products to implement that plan, and perhaps most important, manage their own emotional swings that are a natural part of having money exposed to volatility and risk.

Given these challenges, getting trustworthy financial guidance from a professional can be a significant benefit for individual investors. Making personal financial decisions has never been easy, and a skilled advisor can help guide you through the financial challenges you and your family may face. This article introduces you to the various types of financial advisors in the market and gives you ideas for how to select one that is right for you.

The first step in selecting a financial advisor is to become familiar with the various types of advisors available. There are many different investment professionals that work with individual investors. Within this diverse group, there are many differentiating factors such as unique areas of professional focus and expertise, different compensation methods, and a variety of professional designations, educational backgrounds, and experience.

Financial advisors may handle investment portfolios in different ways. For example, some advisors may only offer investment advice while others might combine a variety of disciplines-such as estate, tax and financial planning-together with traditional portfolio management. The latter group could be considered investment generalists or financial planners, while the former might be known as investment managers or investment specialists. Regardless of whom you choose, your advisor showed be willing to refer you to an related professional for those areas that are outside of his or her knowledge base.

Here are some common types of advisors and professional designations you should become familiar with:

Certified Financial Planner-these individuals have earned the CFP® designation by passing a comprehensive exam covering the financial planning process, income taxation, investments, retirement planning, insurance, and estate planning. They have at least three years of work experience in a financial planning related field and adhere to a code of ethics as well as a continuing education requirement.

Certified Public Accountant-individuals who hold a CPA designation have completed a college-level program in accounting, passed the comprehensive test on accounting principles, and completed the specific requirements of the state in which they practice. Some CPAs have also earned the Personal Financial Specialist designation by satisfying additional requirements.

Chartered Financial Analyst-advisors who have earned a CFA charter hold an undergraduate degree from an accredited university, gained at least four years of work experience in the investment industry, and passed a challenging series of three, six-hour exams taken over a multiyear period. CFA charterholders have demonstrated extensive knowledge in the areas of investment management and adhere to a stringent code of ethics.

Insurance Agent-insurance agents are licensed by the state in which they work and sell insurance products. Insurance agents may be affiliated with a large life insurance company or may work as independent agents. Most states have an ongoing continuing education requirement and other licensing requirements.

Registered Investment Advisor-these firms manage investments for clients and are registered with the U.S. Securities and Exchange Commission (or the state in which they operate if they have less than $25 million in assets under management). Registered firms have a legal fiduciary obligation to to act in their clients' best interests.

Registered Representative-these individuals are sometimes known as stock brokers and are licensed by the state in which they work. They have passed one or more exams administered by FINRA, the industry's self-regulatory body, and must meet continuing education requirements. Registered Representatives are affiliated with securities firms that oversee their activities.

Before meeting with potential advisors, it is important that you understand your financial needs and objectives, the services you are looking for, and what you expect to gain from the advisory relationship. You should interview several advisors before you select one, and you should feel comfortable that the advisor you choose: (1) communicates with you openly and directly, and is willing to meet with you on a regular basis, (2) shares your investment philosophy and puts investment plans in writing, (3) believes that client education is very important in addition to being highly educated himself, and (4) puts a priority on your needs and objectives.

A good advisor will actively listen to you and answer your questions directly. She will volunteer answers to important questions that you may have forgotten to ask, and take the time to ask insightful questions about your situation to better understand your needs. The focus of the conversation should be on your needs and how the advisor can best serve you and achieve your objectives.

Financial advisors are usually compensated either through commissions on investment products they sell, fees that clients pay in exchange for investment advice and portfolio management, or a combination of both. Regardless of the method your advisor uses, you should feel that she is focused on you and your needs rather than her own compensation. It is becoming increasingly popular to work with fee-only advisors as they may have fewer conflicts of interest than their commission-based counterparts.

After you hire an advisor you will want to be sure that you communicate with him often and make sure that he is informed of any changes in your life or financial circumstances. You should receive frequent communications and reports as a standard matter of practice, but you should also initiate additional communication as often as you feel necessary. You should consider your advisor a resource to educate and serve you and your family, so don't be reluctant to ask for help or advice often. A good advisor will promptly respond to you in a professional and courteous manner.

Author's Bio: 

Dan Goldie is a financial advisor and financial planner working with high net worth individuals and families. Investment advice provided through Dan Goldie Financial Services LLC, a Registered Investment Advisor.