Comparison between financial planner and financial advisor

Consumers are presented with a wide range of financial professionals, all of whom may be vying for their business. “Financial Advisor” and “Financial Planner” are popular titles for people who help consumers manage their money.

Every financial planner is also a type of financial advisor, but not every financial advisor is a financial planner. There are over 100 certifications available that a financial advisor can achieve.

Key points to remember

  • A financial planner is a professional who helps businesses and individuals create a program to achieve their long-term financial goals.
  • Financial advisor is a broader term for those who help manage your money, including investments and other accounts.
  • With the proliferation of the financial industry today, many planners and advisers can in fact do the same. So do your homework before hiring someone to guide you.

Financial planner vs financial advisor: an overview

In most cases, a consumer looking for help managing their money will receive this help from some kind of financial advisor.

When choosing a financial planner, it is important to understand the financial planning landscape. According to the Financial Industry Regulatory Authority (FINRA), almost anyone can claim to be a financial planner and can come from different backgrounds.Financial planners can be investment dealers or advisers, insurance agents, practicing accountants, or people without financial qualifications. This is why consumers should do their due diligence before handing their money over to any type of financial advisor. Here are some differences between the two terms.

Financial planner

The financial planner is a type of financial advisor that helps businesses and individuals create a program to achieve their long-term financial goals.

The planner may specialize in investments, taxes, retirement and / or estate planning. In addition, the financial planner may hold various licenses or designations, such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC) or Certified Investment Management Analyst (CIMA), among others. To obtain each of these permits, the financial planner must complete a different set of education, examination, and work history requirements.

According to FINRA, almost anyone can call themselves a financial planner, and they often come from different types of backgrounds.

Financial Advisor

This is a general term for a professional who helps you manage your money. You pay the advisor and, in return, he helps you with a number of money-related tasks. A financial advisor (sometimes spelled “advisor”) can help manage investments, negotiate the sale and purchase of stocks and funds, or create a comprehensive estate and tax plan. If the advisor works with the public, they must hold a FINRA Series 65 license. In addition to this license, there are many other financial advisor credentials that the advisor may hold, depending on the services provided.

The term “financial advisor” as a general term includes subsets of the group of financial advisers, such as stockbrokers, insurance agents, fund managers, estate planners, bankers, and so on.

Think of the comparison between a financial advisor and a financial planner as a funnel with the financial advisor at the top. Continuing this funnel analogy and going one step further, a financial planner is a type of financial advisor.

Key differences

Although these two terms often overlap, a financial planner can be considered a type of financial advisor. In particular, a financial planner is a professional who helps individuals or organizations achieve their long-term financial goals. These can include planning for retirement, a child’s college education, down payment for a house, and more. A financial planner relies on a strategic portfolio allocation for investments with relatively long time horizons, ensuring that expected returns and risk tolerances are balanced.

A financial advisor, on the other hand, is a broader term for someone who may be involved in this type of planning, but also involved in other facets of managing money or financial products. They may, for example, provide life insurance, real estate or accounting services, may help with short-term transactions and / or provide bank accounts.

Special considerations

Most people who need financial help will seek help from a financial planner, which is a more specific type of financial advisor. But the decision about the “type” of financial planner requires some investigation.

Before hiring a planner to help you with your finances, make sure you understand what you are paying for. Ask the planner about their specific training and qualifications, the fee structure, and the services the professional will provide. Consider developing a list of questions when examining a financial planner. Finally, check the disciplinary record and the planner’s references to make sure you are receiving the best quality financial advice.

It is important to note that under the new fiduciary rule of the Ministry of Labor, all professionals who give advice on retirement planning or create retirement plans are required to meet a certain legal and ethical standard. .

Are All Financial Planners Financial Advisors?

In a way, yes. Financial planners are a specific subset of financial advisers who focus on achieving long-term financial goals.

How can I find a trustworthy financial planner or advisor

You can start by asking for recommendations from close friends, family, or coworkers. If your business has a company that manages a pension plan, they may also be someone to ask. You can also search the database offered by the National Association of Personal Financial Advisors (NAPFA).

Once you have the names of the people, check their reputation on BrokerCheck and meet or talk to them first before you hire them.

Who can become a financial advisor or planner?

No specific training is required to become a planner, although you do need to pass the FINRA licensing exams if you will be handling client money. In addition, several professional certifications such as CFP and CFA designations will provide in-depth knowledge in relevant fields.


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