The Difference Between Financial Advisors and Financial Planners

Approximately 75 percent of Americans currently manage their own finances, and only 17 percent work with a financial advisor.

Are you part of the former group? Have you been thinking about partnering with financial advisors to improve your approach to money management?

If you’re considering working with a financial advisor, it’s important to know what they do and how they can help you.

Outlined below are some of the key differences between financial advisors and financial planners. You’ll also find some key details that can help you choose the best financial advisors for your needs.

What Is a Financial Advisor?

A financial advisor is a broad term that describes any professional who helps others manage their money. People pay them a fee and, in exchange, the advisor offers advice and recommendations for money-related matters. They may offer investment advice, act as a broker for stock sales and purchases, or create estate and tax plans, for example.

Lots of professionals can technically fall under the umbrella of “financial advisor.” This includes stockbrokers, money managers, bankers, estate planners, and insurance agents.

What Is a Financial Planner?

financial planner, on the other hand, is a type of financial advisor.

Financial planners work with companies and individuals and help them to create programs that put them on the right track toward meeting their long-term financial goals. They specialize in several different areas, such as investments, retirement planning, estate planning, and taxation.

Financial planners often hold specific licenses and designations, including the following:

  • Certified Financial Planner (CFP)
  • Chartered Financial Analyst (CFA)
  • Chartered Financial Consultant (ChFC)
  • Certified Investment Management Analyst (CIMA)

Financial planners typically have to complete a variety of courses, pass examinations, and meet specific work history requirements to qualify for these licenses and certifications.

How to Choose a Certified Financial Advisor

Do you think you could benefit from meeting with a financial planner? If so, here are some tips to keep in mind that will help you choose the best person for the job:

  • Consider credentials: Review each financial advisor or financial planner’s credentials to ensure they’re qualified to help you
  • Review their list of services: Make sure they offer the specific services you’re looking for
  • Read reviews: Find out what past and current clients have to say about their work

Be sure to ask about fees, too. Financial advisor cost varies quite a bit from person to person (for example, typical asset management fees range from 0.5 to 2.0 percent of your assets per year), so find out what each one charges before you agree to work with them.

Work with Qualified Financial Advisors Today

Now that you know more about what financial advisors do and how they differ from financial planners, are you ready to schedule an appointment to meet with one?

Keep the tips listed above in mind so you can choose the right advisor and don’t have to rely on a random “financial advisor near me” search.

If you’re located in Delaware, Florida, Maryland, Michigan, New Jersey, or Pennsylvania, you can also reach out to us at Black Diamond Financial Solutions. Contact us today to learn more about our services or to schedule a consultation.

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Why Black Diamond Financial Solutions?

At Black Diamond Financial Solutions, we believe in proactive financial management. In these unpredictable times, a passive approach just won't cut it. We're committed to helping you navigate through these uncertainties and ensuring your retirement is secure.

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Disclosure: This blog is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.

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