Just about anyone can set themselves up as a financial expert. Barriers to entry vary: Advisors who earn the Certified Financial Planner (CFP) designation must pass a rigorous series of exams and meet other professional criteria. Others may or may not have such strong credentials to back up their billing.

For consumers looking to hire a finance professional, the cast of characters can get confusing. Definitions tend to blur. A financial educator, for example, may primarily teach money matters while operating a private practice on the side – helping clients manage debt, buy a home, or learn more about investing.

“Some financial educators are aimed at individuals,” said Vince Shorb, chief executive of the National Financial Educators Council, a Las Vegas, Nevada-based organization that offers a financial education certification program. They may have a social media presence and invite people to sign up for courses on topics like building wealth or controlling expenses. They can also write blogs. self-help books and giving speeches.

The challenge is to identify the value these professionals offer and whether it is worth it. Take a close look at their background, education, and compensation structure to understand how they run their business.

Financial advisors (also known as financial planners or wealth managers) typically offer comprehensive financial planning and investment management services and products. They may charge a percentage of assets under management, a monthly or quarterly fee, or a fixed fee. Some earn commissions on the products they sell – and they may require minimum assets to accept new customers.

Some advisors operate independently; others work for a financial services company. In addition to developing a financial plan and managing a client’s investment portfolio, they often handle retirement planning, tax preparation and estate planning.

As a general rule, coaches, advisors, and educators do not sell investment products or oversee someone’s portfolio. They could teach people how to make informed investment choices so that individuals are better able to decide for themselves how to proceed.

“Financial educators don’t dive into someone’s personal finances,” Shorb said. “It’s more about teaching groups of people” about money.

Shorb’s organization offers the Certified Financial Education Instructor (CFEI) designation, which combines money management principles with the teaching skills practitioners need to lead classes for everyone from children to college students. secondary through young professionals.

“After getting their financial education, [young professionals] can get to a point where there is a transfer to a financial adviser,” Shorb said. “That’s when they may need to see someone about their investments or a tax specialist or an insurer.”

More than 2,000 people have earned the CFEI designation, Shorb says. Unlike the CFP designation (which requires a bachelor’s degree from an accredited college or university as well as some work experience in personal financial planning), there are no educational prerequisites for applying to become a CFEI. All you need to do is take 40 hours of classes and pass an exam.

While financial educators may solicit individual clients, they are more likely to work with nonprofits, schools, faith groups, and other organizations. For example, the National Financial Educators Council partners with a minor league basketball group, The Basketball League, to provide financial education to its professional players.

If you are looking for financial advice, note the distinction between advisors and educators. Some financial educators call themselves financial planners, but they won’t manage your investment portfolio or process transactions such as stock trades.

“One thing financial advisors and educators have in common is helping people achieve their financial goals,” said Lori Hendrickson, who oversees the University of Minnesota Extension’s Financial Educator Certification Program. “Our goal is to develop an individual’s skills and knowledge, which can lead to behavior change. A financial advisor would help you develop a strategy to achieve your more specific goals.

Hendrickson, a family resilience educator, says graduates of the 10-module course receive a certificate from the university, but he is not affiliated with other programs.

She adds that some financial educators are entering the business to distill lessons learned from their own struggles. “A lot of people have overcome their own financial issues, like getting out of debt,” she said, “and now they want to share what they’ve learned so others don’t have to go through the same issues. ”

Continued: What to look out for — and watch out for — before giving your money to a financial advisor

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