Financial Planner vs. Financial Advisor: What’s the Difference? – Business Insider
- A financial planner holds the Certified Financial Planner (CFP) designation and can help clients develop plans to reach goals by considering the entirety of their financial health and standing.
- A financial advisor focuses on their clients investments and how they can use them to build wealth.
- Though some of their services overlap, each has its pros and cons that make one more appropriate than the other in different circumstances.
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Financial planners and financial advisors both provide invaluable services if you’re looking for guidance when it comes to your money. But the terms are not interchangeable. Though financial planners and advisors may offer similar and even some overlapping services, it’s important to know the differences between these roles and what they can do for you before choosing to work with one.
Here’s a closer look at what financial planners and advisors do, when you might want to work with one over the other, and what to look for when considering which to go with.
Financial planner vs. financial advisor: At a glance
Both financial planners and advisors aim to provide advice to help better manage your money. However, one focuses more on the bigger picture, while the other looks mostly at investments.
- A financial planner takes into consideration the whole of your financial life, then develops plans and strategies to help you reach long-term and short-term goals, such as paying off debt, saving for the future, or purchasing insurance.
- A financial advisor looks mostly at investment goals, portfolios, and building wealth. They provide services such as making transactions and monitoring performance.
What is a financial planner?
Financial planners take a 360-degree view of their clients’ lives to gain an understanding of their complete financial picture, then work with the client to develop customized plans that aim to reach specific goals.
“A financial planner will often assist a person or household with a personal financial plan, including helping to plan and consult on financial matters such as budgeting and spending, debt management, savings and retirement planning, estate planning, insurance planning, etc.,” says Sean M. Ciemiewicz, Senior Vice President at OneDigital Retirement and Wealth Management.
Ciemiewicz adds that financial planners aren’t required to be licensed to implement financial plans. If they aren’t, they can work with consultants, advisors, and those who are licensed to make specific transactions to service their clients. In these cases, financial planners take on a coordination role, ensuring plans are executed correctly.
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