Financial Advisor vs Financial Planner – Who Do You Need?

There are two things that you are never too late for. One is to give something another try, and the second is to get your finances in order.

While the former requires only a little courage, the latter can often become a complicated mess of numbers, details, figures, and legal and fiscal jargon. This is why it is worth investing in an expert. In turn for a little money, you can get both broad and detailed perspectives about your financial condition and know how to grow your wealth.

What is Financial Security?

Both financial advisors and financial planners help you out with financial security. In simple words, financial security refers to the fact that you have enough money to meet your current and future needs.

Financial security is a basic requirement of life today. Without adequate assets, you cannot hope to imagine how you will carry on with your daily life. However, finances are also complicated. What if you miss out on a form detail? What if you don’t understand the legal implications of an investment? Losing your hard-earned money can be a terrifying prospect, and jeopardize your financial security too.

Leaning on Financial Experts

Just like you depend on a trusted mechanic for the health of your car, you should depend upon a trusted financial expert to ensure financial security and growth.

But financial experts are not all the same. Indeed, one common question may have is about whether they need to engage a financial advisor vs financial planner. Fret not – we will solve it all out for you. Before we get down to the major differences, let us understand the role of both a financial planner and a financial advisor in turn.

Who is a Financial Planner?

In a nutshell, a financial planner is one who will help you meet your financial goals. Thus, their job is to act as a bridge between what you have and what you want to achieve. Hence, financial planners work toward specific goals.

Common types of financial planners include retirement planners, insurance planners, post-divorce financial planners, etc.

Here are the major characteristics of financial planners, which will help you understand the difference between a financial advisor & a financial planner-

• They help you out with a specific financial goal.
• Financial planners have a specific education, expertise, and license in their field of operation.
• Financial planners approach your finances with a more specific goal in mind.
• Most importantly, financial planners work with what you have. Their goal is to help you use and save your finances, not necessarily grow them.

Who is a Financial Advisor?

Consider a financial advisor as simply the broadest agent you can find for your money. An advisor effectively becomes ‘in-charge’ of your finances (with your due permission and supervision, of course), and aims are growing and managing your assets. Thus, if you want to dabble in stocks, acquire or sell off assets, or budget and save more money, then an advisor is the one you need to turn to.

Thus, the major features of a financial advisor are –

• They tend to do much more with your money as compared to a financial planner.
• Their aim is not just to manage and maintain your money, but to also grow it in various ways.
• The knowledge and experience of an advisor tend to be more diverse.
• Advisors also take up a major role in educating their clients to help them understand what is happening to their money.

Financial Advisor vs. Financial Planner

Now you know the basics of the two terms. But if you are still a little confused about the difference between a financial advisor vs a financial planner, then here is an easy table to help you out –

Theme	Financial Advisor	Financial Planner
Ultimate goal	To help manage, maintain and grow your money and assets	To help you meet a specific financial goal
Growth of Finances	Here, there may be an active growth of your finances through investments and other strategies	Growth of money is usually passive, such as via good budgeting and saving strategies
Orientation	Financial advisors are usually more holistic in orientation, with an eye on both the market and your personal circumstances guiding decision making.	The focus is majorly on your personal conditions. The market and larger economic forces may not factor in unless required.
Education	A major goal of advisors is to educate you on how your finances are being used, and what results they are producing if invested in the market.	The education provided by a financial planner can be considered more practical in nature, such as budgeting, planning, bank basics, etc.
Interest	In many cases, financial advisors represent not just clients, but also corporates and other institutions they are hired by. Your interest may thus be in balance with these interests of the advisor.	Planners often have a fiduciary relationship with their clients, meaning that they are required to act in their best interest.
Payment	Advisors are compensated in one of three ways. They may either only take a fee from you; take a fee per purchase you make and earn a commission on it, or they may only get a commission on what you purchase.	Planners may charge you a flat rate based on the hours/days they spend with you; some may also charge an additional percentage of the cut they manage for you.
Relationship	A financial advisor can be considered a broader term.	Financial planners are a category within the ambit of financial advisors.

Thus the difference between financial advisor vs financial planner must now be clear to you now. Though many today use the words interchangeably, financial advisors and planners are quite different from each other, especially in terms of the service they provide to you. Knowing the difference between them is very important for you to take up the right fiscal agent for your needs and help you get the best out of your financial situation.

In the end, the easiest way to differentiate between financial advisor vs financial planner is to remember this –  advisors help you grow what you have, while planners help you preserve what you need.

Who Do You Need to Turn To?

Are advisors inherently better than planners? Or do planners have an edge in the financial advisor vs financial planner relationship?

The answer is no. Who would work best for you depends upon what your particular needs are?

You need a financial planner when –

• There is a specific goal – college fund, retirement fund, housing budget, etc. that you need to fix.
• You find yourself consumed by poor spending habits and are facing issues as a result.
• You need a simple, long-term solution to your financial issues that you can rely upon and follow without getting too much into jargon and market forces.
• You want to create good savings with the stable income you have.

You need a financial advisor when –

• You have a set amount of income or assets that you want to grow and gain from.
• You are ready for some in-depth financial education.
• When you are ready to put part of your assets into market situations and see how they pan out.
• When you have certain properties, assets, or money you are not quite sure how to put to best use.

Getting A Reliable Agent

Now that you know the difference between a financial advisor vs a financial planner and also have a good idea of who to approach for your needs, it comes down to choosing a reliable partner, be it an advisor or a planner.

When you choose an advisor or planner, you choose to entrust the person or agency with your hard-earned money and assets in the hopes that they will help you make the best of things. So here are some pointers that you can keep in mind when employing either a planner or advisor for your needs –

• The first and most important point is reference and reviews. A good agency or agent is one who is trusted and recommended by many. Be sure to read both the good and bad reviews of the agency to get a balanced perspective of their services.
• However, word of mouth is not enough. Make sure that any agent you go to has the necessary documentation and licenses. Common licenses include the Certified Financial Planner designation and Canadian Investment Manager designation. You can also search for any certification your agent provides on the net.
• Any agent should be driven by your interests, even if they get paid via commission. If you walk out of a meeting with questions or doubts or are not completely convinced by the plan or advice given, then you may need to reevaluate your partnership.
• At no point should a financial advisor or planner compromise your financial security. This is a very basic requirement, but something shady or commission-hungry agents may choose to put their interests first instead of yours. Thus, beware of such disreputable agents.

Thus, in this article, Forest Financial Planning has covered in detail the major difference between a financial advisor vs financial planner, and hopefully, it helped you decide which one you need.