Financial Advisor vs Financial Planner: What to Look For?

A financial advisor is used interchangeably with financial adviser.

Financial advisor is used all throughout this site to refer to a profession compared to “financial adviser” which is usually treated as an ordinary phrase.

Traditionally, a financial advisor’s job is associated with buying and selling financial products and securities in behalf of clients.

Thus, the profession is also taken to mean as a broker. This is because they use stocks, bonds, mutual funds, real estate investment trusts, insurance and other financial products to meet the need of their clients.

Being in this profession requires more than being a broker or facilitator of transactions. Fortunately, the title had evolved to take into a more holistic view of clients’ financial needs and goals. They now provide financial planning services. Thus, they are sometimes called personal financial consultant.

An advisor assists clients plan and arrange a wide array of financial concerns such as

  • savings
  • creating a budget
  • dealing with debt
  • choosing the right protection
  • retirement, tax treatment
  • wills

From this perspective, a financial advisor’s job is considered much broader than that of a financial planner, although there is a thin dividing line between the two professions.

On the other hand, a financial planner is used to be associated with assisting clients prepare financial plans.

Financial planners help clients develop a detailed financial strategy or financial plan for meeting short- and long-term financial goals.

Financial goals are desires and aspirations with financial values.

A financial planner should be able to assess all aspects of your personal finance for a holistic approach to financial planning. Personal finance has six broad categories or components:

  • Cash management. This starts with an assessment of your financial position.
  • Risk management. This is basic to determining adequate protection.
  • Investing. This is the main vehicle for wealth accumulation.
  • Tax planning. This is to ensure that your overall financial plan takes advantage of the minimum tax liability.
  • Estate Planning. This is to ensure that your estates goes to your children or heirs when you die.
  • Retirement planning. Relying on social security for retirement is a risk.You should build-up a savings plan to ensure a comfortable retirement life.

Successful financial management involves addressing all the six categories. Personal finance is likened to body system. If one part (organ) has a problem, you need financial check-up.

The financial diagnosis could lead to finding a strategic financial solution. The ability to analyze the big picture is a value-added skill of a financial planner. Neglect of any aspect of personal finance can lead to missed opportunities and potential long-term financial consequences.

To be able to create a solid financial plan, your financial planner cum financial advisor should be a generalist. He or she should be able to act on different roles: an accountant, a lawyer, an economist, an investment adviser, a psychologist, a stockbroker, and many others. But instead of hiring one, you can be your own financial advisor and financial planner with only a single license. You can be all of these roles if you increase your financial literacy. Learn more with key articles of this site through these links:

  • Steps to a Solid Financial Foundation
  • X Curve and the Total Financial Solution
  • Investing Basic

You may attend Wealth Academy seminars at IMG offices near you. If you wish to join contact me for more details.