Financial Products & Services 101

Most of the recommendations financial advisors provide to clients help them take action: get invested, invest more effectively or stay invested. Financial advisors then access the products and services that will help clients achieve their goals.

Most products and services fall into one of four categories:

• Cash and equivalents: These may include high-yield savings and money market accounts or funds, certificates of deposit (CDs), or structured notes, etc. These “cash reserves” help clients navigate adversity and take advantage of opportunity without affecting long-term investment strategies or taking on unhealthy debt.
• Insurance and risk mitigation: Staying invested for the long term means being able to withstand adversity. Similar to cash reserves, insurance products help clients do that. This includes health insurance, life insurance, disability and long-term care insurance, auto and homeowner’s insurance, and liability and umbrella coverage.
• Fixed investments: An investor is guaranteed a “rate of return” (usually interest or dividends) on these investments for a fixed timeframe. They include CDs, bonds and fixed annuities. These types of investments provide stability and diversification to a portfolio.
• Equity investments: Supply and demand influence the value of these investment. They include securities (stocks), Exchange Traded Funds (ETFs), mutual funds, real estate and more. They are held in investment funds like 401(k)s, individual retirement accounts (IRAs), Roth IRAs and brokerage accounts. These matter because over time, they are the best hedge against inflation.