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7 Types of Financial Companies

There are 7 basic types of firms that provide financial assistance, support, guidance, education, investments, and solutions/products.

There are Registered Investment Advisors (RIA), Broker Dealers (B/D), Insurance Companies, Robo Advisors, Accounting firms, Tech Companies, and Discount Broker Dealers.

First we have our Registered Investment Advisors. These are, as a general rule, partnerships or smaller corporations that manage the overall financial situation of clients, and in some cases institutional investors as well. They must be registered with the Securities and Exchange Commission (SEC) for each individual state that they have clients in.  An RIA Financial Advisor will conduct information gathering, Risk tolerance, and spend time getting to know your goals and needs. Most of the time they also educate a client as to what the implications are of making different financial decisions. One of my favorite things about an RIA, is that many of them will be full service. They’ll help with investments, real estate, insurance, estate planning, power of attorneys, wills, and more. They may outsource part of it, or bring in an expert to do estate planning, etc. But they keep you aware of the broad scope of protecting, growing, and sheltering your money. You may not have heard of any of these, but here are some RIA’s: Geneva Advisors, HighTower Advisors, Mill Creek Capital Advisors, Ferguson Wellman Capital Management, Swan Global Investments, and True North Advisors.

Broker/ Dealers are those companies that are like The Wolf of Wall Street. I mean, except that fact that they aren’t awful money laundering devils. They call people to sell them financial products, usually in the form of stocks or bonds. Investment advice is given, and they range from small boutique firms to large commercial companies and investment banks. The difference between an RIA and a Broker/Dealer is a B/D historically purchases their own securities (stocks and bonds and other products) and then sells them to the customer, whereas an RIA buys securities on the client’s behalf. The Broker of a B/D is buying and selling on behalf of clients, the Dealer side is when the company trades their own securities. Examples of Broker/Dealers include Raymond James, Wells Fargo, AXA, Waddell & Reed, Voya, and Edward Jones

Insurance Companies usually deal with just that… Insurance! Northwestern Mutual, Geico, Allstate, State Farm, Progressive, Farmers, Liberty Mutual, and New York Life are a few examples. Most of the ones that have huge TV ads. There isn’t much else to say. These companies are very important, and having specialized skills in specific insurances can be very beneficial in reducing premiums and having quicker turnaround times when claims are made. Some RIA’s and B/D’s will have specific individuals/teams in their group that specialize in either selling insurance, or working with insurance companies to get your insurance. One thing I like is how an RIA can work with many insurance companies, whereas an agent for a specific company only sells that Insurance. Some insurance agents will be licensed with several companies and can sell you policies from different companies depending on your needs.

The way of the future is Robo-Advisors. The basic concept here is that you can break down risk tolerance and needs into numbers, and computers can then spit out information about what you should do, or you can authorize a computer to auto-invest and rebalance and work out your investments for you based on your information you give it. Very smart people back these up and as a result of mass users for one program it can be cheaper to use a Robo. Remember though, that holes are usually left, and Robo’s can only do so much.

Tech companies are companies that leverage tech with finance. Lending Club is an example of that. You add money that is utilized in creating loans that then pay you back as the person pays back lending club. Robinhood is a financial app that has free stock trades. Stripe is a payment taking company. Some finance companies create platforms for making trades like TDAmeritrade or TradeKing, (though some may be better classified as Robo-Advisors, depending on how they are used). Some create plateforms for financial planning, like MoneyGuidePro, or SilverTree, that allow you to maintain and track financial data and policies for insurance and estate documents all in one location. One company local to Utah is TradeWarrior, which can auto rebalance any portfolio while taking specific needs and illiquid assets into account.

Accounting Firms are our next stop. These are a finance tracking type of company for businesses and self-employed individuals. They may provide book keeping for paying employees, create budgets and financial statements for companies, and also deal with tax-returns. I suppose they are for everyone in the sense of tax-returns, many individuals go to accounting-firms for taxes, though some companies will specifically only do taxes. Beyond the actual tax returns, accounting firms can help consult on risk management and tax implications of certain operations.

The last of the seven is Discount Broker/Dealers. These are just really really low-cost Broker/Dealers. Think Fidelity, and Vanguard. Vanguard is the most notorious of all of these, as the regularly create huge market changes. Some of their funds will have expense ratios of 8 Bips, which to be simple is nearly three times cheaper than most funds to invest in.

Which ones you’ll want to work with depend on your needs, interests, comfort, and knowledge surrounding the individual companies. Many people want to lump all companies in one category as ‘good’ or ‘bad’ or ‘lazy’ or ‘smart’, but the truth is, there are losers and winners all around. You just have to find someone who is trust worthy, and has a good track record of helping people achieve their goals.

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4 Basic College Money Skills: How To Master Them

College always walks up and says: “Gimme money”. It’s the worst bully since Billy who always took your quarters during recess in 2nd grade!

Here are some amazing articles I’ve read about college kid money skills.
1) Getting Scholarships for school
2) avoiding Debt in College
3) how to deal with CC’s during College
4) how to start a savings account, and basics on opening an investing account

Basically, this is a really good reference and resource of some other writers work about the subjects. Feel free to comment extra resources you’ve found that are good too! I’ll make sure to update your research into this list also!

The Basics of College:

http://wellkeptwallet.com/2012/05/how-to-graduate-college-without-any-debt/

This article gives 5 basics: 1) Consider the Cost, 2) Work During School, 3) Apply for Scholarships, 4) Work for the University, 5) Be Radical – Try Crowdfunding! Thank you Deacon Hayes for this article!

https://wallethacks.com/money-tips-college-students/
Jim Wang gives one of the best and most concise run downs on 40 basic money tips in college.

Financial Advice To Start Your Military Career

I honor Doug, whom started the Military Guide. If you want to or do serve in the military, Doug knows the finances behind it.

Get The Scholarship

Jocelyn from TheScholarshipSystem shared her site, and I highly recommend it. The Best article she has, which is a freebie if you join her email list, is “The 3-Steps I Used To Write Reusable Scholarship Essays QUICKLY and That Won Me Over $125k”
http://thescholarshipsystem.com/ – her article The 10 basic steps to getting scholarships
http://thescholarshipsystem.com/ – 5 things to update on your FAFSA (Right NOW!)

 

KristinaEllis.com hosts Kristina’s books about how she paid for college “Confessions of a Scholarship Winner” and “How To Graduate Debt Free”. I met Kristina in person and FinCon16 in San Diego and would recommend her books to anyone who is serious about getting scholarships in college.

I can’t rant enough about Brynn Conroy and the wonderful FemmeFrugality site. These tools are great to understanding the mindset of applying for scholarships.

http://femmefrugality.com/how-to-write-a-successful-scholarship-essay/

http://femmefrugality.com/playing-the-odds-on-scholarship-opportunities/

http://femmefrugality.com/why-a-scholarship-resume-is-an-important-part-of-your-college-arsenal/

Hear the Ginger

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Avoid The Debt

Robert Farrington, a friend of mine, gave me some articles he wrote about avoiding debt and investing during college. This article is about 6 people in different situations, and how they avoided student loan debt. http://thecollegeinvestor.com/15182/6-college-graduates-share-avoided-student-loan-debt/

Jason Butler gives you the run-down on TextBooks and cutting costs here. http://thebutlerjournal.com/2013/08/09/saving-money-on-college-textbooks/

And how about the cost of an apartment? LaTisha Styles from StylesTV shares how to deal with an apartment here, https://www.youtube.com/watch?v=7UEn_k0DNb8

Credit Cards in College

http://investingdollarsandcents.com/1/post/2015/09/12-things-to-consider-if-you-want-to-start-investing.html

This article is technically about investing, but I really like that it gives you a good mindset about how to think about debt, and weigh the options in investing, saving, or paying off debt.

Where to Start Saving/Investing

The College Student’s Guide to Investing

There is no where safer to start than a website DEDICATED to college investing.

http://www.invest-safely.com/personal-finance-goals.html

The writer for Invest Safely is on point, every time. These 8 points are sure to get anyone started on the right track investing and saving.

How to Win the Stock Market Game [4 Rules]

If you want basics on how to invest in stocks, this is the place to start. It shows statistics and gives basic explanations for types of stocks, mutual funds, and other places to start with your money.

http://www.moneysmartguides.com/become-stock-market-millionaire

This is a very good basic guide explaining how to split your investing money, how to fund an account, and ways to keep your money safe. It talks about Bonds and Stocks, and good general rules for picking investments, and ways to diversify in multiple types of securities.

How to Fund a Brokerage Account and Start Investing Online

Lastly, this is a beautiful article that gives explicit details on HOW to open an account, and basic processes for utilizing it (as well as other useful information).


What are your resources you’ve liked in these areas? What do you use for credit cards? What are your beliefs? Share them with me in the comments, and I’ll be sure to put a few quotes on Instagram.

Jacob Johnson

The Financial Ginger