Financial Planners and Financial Advisors: What’s the Difference?

People looking for financial advice are often presented with a broad range of financial professionals, all looking to be the ones to guide that customer’s financial decisions.

You often see titles of ‘Financial Advisor’ and ‘Financial Planner’ on people who are looking to help a consumer manage their money.

On the surface, it can be hard to know exactly what these titles entail and how they will match your needs. There is an important difference between both terms. For example, all financial planners are financial advisors, but not all financial advisors are financial planners.

Key Takeaways

  • A financial planner helps companies and people create a financial program to meet their long term goals.
  • Financial advisor is a broad term for professionals that help manage money.
  • Research a financial professional’s record, qualifications and services before hiring.

Financial Planner vs Financial Advisor: Overview

Most people that seek wealth management services will receive help from a financial advisor of some kind.

When choosing a financial planner, understanding the landscape of financial planning is important. There are many different types of professionals from various backgrounds that can claim to be a financial planner. This can include investment advisors, insurance agents, brokers and accountants.

It is for this reason that people must perform their due diligence before putting their financial future in the hands of any sort of financial advisor. Here are some differences between both to help your due diligence.

Financial Planner

A financial planner is a type of financial advisor that helps companies and people develop a program to meet long term goals regarding their finances.

A planner may specialise in investments, taxes, retirement planning, estate planning and much more. There are many different licenses that a financial planner can hold which will help to tell you their area of expertise.

A reputable financial planner will hold the following credentials:

Financial Advisor

This is a broader term financial services professionals that help manage money to improve your financial situation. An advisor will generally have a much larger scope of services that they offer. This could include wealth creation, property investment, asset-based investments, and self-managed super funds.

A reputable financial advisor will hold the following credentials:

  • Diploma or bachelor’s degree
  • Specialise in one or more areas of finance
  • Their company holds an Australian Financial Services License (AFSL) from ASIC.
  • Registered on ASIC financial advisor register

Financial advisers can generally include specialists in stockbrokers, insurance agents, money managers, estate planners, wealth creation specialists and more.

It is best to think about it as a tree with financial advisors on top with branches going down into various types, one of which being financial planners.

Summary

Most people that need money help will consult a financial planner, the type of planner to choose requires more investigation based on your goals.

Before you hire a planner or advisor, understand what you are paying for. Look at their website or question them about their training and qualifications, fees and specific services that they provide.

If you’d like to find out more about financial planning, wealth creation and investment strategies, our team at Ethica Private Wealth Specialists may be able to help you achieve your financial goals with a 2 Hour Free Consultation.

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.