Income is one of the pillars to making a wealthy life. Yet, smart planning and flexible wealth management can turn your money into wealth. Thus, financial planners and financial advisors come along to support you!
It is safe to say that every financial planner is a kind of financial advisor. Yet, it is not right in the reverse order. So, how different are they, a financial planner vs. an advisor? Scroll down this article to have practical insights and find the answers by yourself!
Financial Planner vs. Financial Advisor: What Are The Primary Differences?
A financial planner guides you or your organization to develop a strategy to reach their long-term financial goals. There are many aspects that a financial planner gets involved in, such as budgeting, saving, investing, and retirement planning. It is common sense that a financial planner has a full-time job at a bank, wealth management firm, or non-profit organization while assisting individual clients.
Yet, you might argue that everyone can become a financial planner if it relates to budgeting, saving, and investing. Financial planners indeed include many people from various backgrounds, such as accounting, brokerage, investment advisory, etc.
Finding a trustworthy financial planner requires knowledge about the financial planning landscape. Besides, you should check whether they have licenses, such as CFP – Certified Financial Planner, CFA – Chartered Financial Analyst, ChFC – Chartered Financial Consultant, etc.
A financial advisor assists a person to manage her money. It relates a broad range of aspects, such as investment management, stock buying or selling, tax planning, comprehensive estate plans, etc.
So, a wide range of professionals, such as capital managers, estate planners, bankers, stockbrokers, etc., can be financial advisors. They help you reach your financial goals through their financial consultancy.
Through an overview above, you can spot some main points in the differences between a financial planner and a financial advisor. In this section, we will summarize the primary differences.
- Financial planning relates to mapping out a strategy that an individual or an organization should follow to achieve their long-term financial goals. The base that a financial planner uses to build strategies on includes portfolio allocation for investment, long-term horizons, risk tolerance, the expectation of returns, etc.
- Financial advisory points out a broad scale of planning and managing investments. It can include planning, life insurance provision, accounting services, etc.
Tips For Getting a Reliable Financial Planner
As we have mentioned, you must research a financial planner’s credentials. The information under your consideration can be licenses and their experiences. Also, you should double-check their qualifications through the professional pieces of training they have joined. As a result, you can determine whether they are suitable for your needs or not.
Financial planning fees are among the most important factors. Yet, many people bypass it when they research a financial planner. There are two common types of payment, including a one-time fee for the financial review or multiple fees per time of change or plan update.
You can also come up with a list of questions to vet a financial planner. The disciplinary record and references for the planner stay relevant to determine whether a planner can provide high-quality financial guides.
Are All Financial Planners Also Financial Advisors?
Yes, all financial planners can claim themselves as financial advisors. Their job is to guide an individual or an organization to manage their money and plan out the future to reach their financial goals. It is a kind of advisory, so it is reasonable that every financial planner can be a financial planner.
Who Can I Become a Financial Advisor or Planner?
There is a wide range of backgrounds when you check the top financial planners. They can be investors, brokers, insurance agents, etc. So, it is safe to state that you do not need a specific prerequisite and base to become a financial planner.
If you have an interest in this field, you will prepare for the exams of Financial Industry Regulatory Authority (FINRA) licensing, Certified Financial Planner (CFP), and Chartered Financial Analyst (CFA) designations.
Before You Go
A financial planner can be called a financial advisor while the reverse order needs much consideration. Financial advisory is a broader term as it relates to planning, investment management, wealth management, tax accounting, etc.
Although the description of a financial planner and a financial advisor overlap each other, this article points out some primary differences. So, you can better understand their jobs and decide which kind of financial services are more suitable for your needs.
“A financial planner vs. an advisor: What are the differences?” is one of the blogs on Library of Traders. Browse our blog section to explore more interesting topics of trading and investing!
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