The Difference Between a Financial Advisor and Financial Planner - Money Tip Tuesday

It’s quite common to use the terms financial advisor and financial planner interchangeably, but did you know that there are differences between the two? Both can guide you on your financial journey, but there are some key differences between them.

If you’re looking for someone to take a look at your finances, but are not sure if you want a financial advisor or a financial planner, here’s what you need to know. 

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Transcript: 

Welcome to Money Tip Tuesday from the Making Money Personal podcast. 

First, let’s take a look at what a financial advisor is and what a financial planner is. A financial advisor usually helps clients with one-off investment planning and other financial matters. They evaluate your financial situation, where you want to be in the future, and give advice to help you build wealth. Financial advisors are usually required to have passed licensure and certification exams to give advice. Financial advisors usually charge an annual fee for their services which can range from 0.5% to 1% of your assets that they manage. Some financial advisors may also charge commissions on products they sell, like mutual funds or annuities.  These commissions can be as high as 6%. 

A financial planner typically creates a holistic plan that will help you and your finances in the future. They take everything into account, from savings and investments to retirement and estate planning. Financial planners are usually certified, the most prevalent being Certified Financial Planner, or CFP for short. Many financial advisory firms have certified financial planners on staff. If a financial planner is giving investment advice, they need to register with the Securities and Exchange Commision first. Financial planners charge fees for their services, and depending on the services, the fees can be monthly, quarterly, annually, or project-based. Like financial advisors, financial planners can also receive commissions on the products they sell. 

So how can you decide if a financial advisor or if a financial planner would work best for you? Both can help you with your finances, but it all depends on your circumstances and what you want to do with your finances. A financial advisor is great for short-term projects and investments. If you are already comfortable in your financial situation and are just looking for extra guidance, a financial advisor is the way to go. A financial planner is great for developing a long-term, comprehensive plan for your future. If you are going through any major life changes such as going to college, buying a house, getting married, having a baby, or retiring, it might be a good idea to talk with a financial planner.  

Before you pick the financial advisor or financial planner that will help you with your finances, there’s a few things you should look for. First, make sure that they are licensed and check their credentials. Ask them about their experience with finances and make sure that they would be a good fit for you. Make sure you understand what services they will provide and how much it is going to cost you. Remember, if you don’t feel comfortable with what they have to say, you don’t have to choose them. This is your financial future.  

If there are any other tips or topics you’d like us to cover, let us know at tcupodcast@trianglecu.org and don't forget to like and follow our Making Money Personal Facebook, Instagram, and Twitter pages and look for our sponsor, Triangle Credit Union on Instagram and LinkedIn to share your thoughts.  

Thanks for listening to today’s Money Tip Tuesday and check out our other tips and episodes on the Making Money Personal podcast.  

Have a great day!