Financial adviser vs. financial planner

There are many options available for you to manage your finances and work toward your financial goals. And there may be some choices that are better for your situation than others. This is where working with a financial expert may help.

But as you begin to research your options, you may come across professionals with similar-sounding job titles, like “financial adviser” and “financial planner,” and not understand how they differ. Read on to learn more about the key differences between a financial adviser and a financial planner.

Key takeaways

• “Financial adviser” is a broad term for a professional who can offer financial guidance and services in a variety of areas, including financial planning, saving, borrowing and investing. These professionals can also be knowledgeable when it comes to more specific fields like insurance, taxes and real estate, and they may have credentials to back up their expertise in those areas. 
• A financial planner is a type of financial adviser who more specifically offers clients support in developing strategies for managing their money and reaching any financial targets they may have. Some financial planners may also have more specialized professional designations or credentials—like a certified financial planner (CFP) certification.
• Whether you choose to work with a more general financial adviser or a more specialized professional like a financial planner, it’s wise to research each professional’s credentials before agreeing to work with them.

The title “financial adviser” can apply to a broad range of money-related responsibilities. While some financial advisers may offer financial planning services, they can also be:

• Bankers
• Brokers 
• Insurance agents
• Investment managers 

Depending on their titles and areas of expertise, they may offer professional services and support in a wide variety of other financial spaces. 

Because of this, some financial advisers can hold a number of different designations, certifications and licenses that pertain to their specific fields of expertise and further qualify them to provide services to clients. Many of these credentials are formally recognized by the Financial Industry Regulatory Authority (FINRA), which monitors the market behaviors of financial professionals to ensure that they’re performing their jobs with integrity and transparency.

Depending on their designation, more specialized financial advisers may also be required to register with specific organizations. Investment advisers, for example, typically have to register with their state securities authority or the Securities and Exchange Commission (SEC) in order to provide services to investors.

Financial planners are a type of financial adviser responsible for mapping out thorough strategies to help clients achieve their financial goals. These planned strategies can involve creating a budget; managing investments and assets; estate planning; and saving for things like an emergency fund, a retirement account, a down payment or a college education.

It’s important to be aware that many professionals in the financial world claim the title “financial adviser” or “financial planner” without having a significant background in financial planning or receiving any formal designations. However, doing research into a financial adviser or planner’s earned credentials can help ensure that you’ll be working with a reputable and experienced professional.

To find someone qualified to offer financial planning services, seek out a CFP.

If a financial professional wants to become a CFP, they’ll need to do the following:

• Earn a bachelor’s degree or an advanced degree like an MBA
• Complete a list of CFP Board-required classes on financial planning, or earn either a certified financial analyst (CFA) designation or a certified public accountant (CPA) designation
• Achieve a passing grade on the CFP exam
• Obtain at least three years of full-time professional experience in finance or two years in an apprenticeship
• Adhere to the CFP Board’s standards for professional conduct, which include passing an extensive background check

Once a financial professional has fulfilled all of these requirements, the CFP Board will decide whether to grant their certification. If it’s granted, they will have to renew it annually to remain an active CFP.

When considering whether to work with a financial adviser or planner, it’s important to remember that a financial planner is typically a more qualified type of financial adviser. And that’s especially true if the planner has earned the CFP designation.

While a financial adviser may be helpful when it comes to general financial advice, a financial planner may be a better option if you’re looking for help to achieve long-term financial goals. 

In addition to financial advisers and financial planners, there are a number of other job titles in the world of finance, including the following:

RFCs are financial professionals who have applied for and earned designations from the International Association of Registered Financial Consultants (IARFC). They need to have a proven track record of their financial expertise and success in meeting client needs, in addition to the following qualifications:

• At least three years of financial planning experience
• A bachelor’s degree or an advanced degree in finance, economics, business or a related field
• IARFC-required designations and licenses as well as any licenses required for their specific practice
• An agreement to continue their education by completing a minimum of 40 hours of personal finance and professional practice management work every two years, as well as four hours of ethics work every two years

A fiduciary is an individual who manages someone else’s money and assets. They can be a professional financial adviser, but they don’t have to be—sometimes, they can just be a close friend or family member. However, they do have a legal fiduciary duty, meaning they’re required by law to give advice that’s in their clients’ best interest.

A wealth management adviser is a financial professional who works with clients with high net worth to help them manage their money and assets. Wealth management advisers also help clients develop strategies to maximize their personal wealth.

Unlike traditional financial advisers, robo-advisers involve limited human interaction. They’re automated digital platforms that use algorithms to recommend investment portfolios and strategies based on a client’s goals and preferred level of risk tolerance.

When it comes to improving your financial literacy and getting assistance in managing your money, it may be helpful to work with a financial adviser or a financial planner.

While the term “financial adviser” can apply to a broad range of money-related responsibilities, a financial planner is often a more qualified type of financial professional. A financial adviser may be helpful when it comes to general financial advice. But a financial planner may be a better option if you’re looking for help to achieve long-term financial goals.

As you do your research and narrow down your choices, it’s good to choose a professional whose skills align with your goals and whose credentials show that they’re qualified to guide you.