Many people think that a financial adviser and financial planner are the same thing, and speak of them as such — and indeed both do help individuals manage their money in the broadest sense. That said, in general, there are some key differences between a financial adviser and financial planner:

  • A financial adviser is often more focused on overseeing an investment portfolio for an individual, while a financial planner is more big picture, focusing on an individual’s  long-term financial goals and how to achieve them.

  • A financial adviser may be more narrowly focused on your investments, while a financial planner might look beyond just your investments into the big-picture of your finances.

  • It’s more common for a financial planner to form an ongoing relationship with a client, whereas an adviser may come in for limited periods of time.

Looking for a new financial adviser? This tool can match you to an adviser who may meet your needs.

Is there a legal difference between financial planners and financial advisers?

One big thing to note here is that the terms financial planner and financial adviser aren’t federally regulated, so plenty of people might refer to themselves as a financial adviser or financial planner and do different things. That said, there are industry certifications and designations — like certified financial planner, chartered financial analyst and chartered financial consultant — that require a certain level of education, training and experience to hold.

What is a financial adviser?

The title financial adviser is actually used by various personal finance professionals including stockbrokers, money managers, insurance agents, and bankers. Because these professions all fall under the financial adviser umbrella, consumers should look at a professional’s specific designations (more on that below) to learn more about their expertise and the services they offer.

See also: One surprising question you should ask any financial adviser you might hire — their answer could be a huge red flag

“Financial adviser is strictly a marketing term with no legal or technical definition. Yet, it’s the most often used term to describe a variety of financial professionals. Virtually anyone can use this term from insurance agents to certified public accountants (CPAs) and 360 degrees in any direction among financial service providers,” says David Maurice, certified financial planner at Worthwhile Wealth.

That means credentials designations are key for you to look at, as is understanding exactly how the professional gets paid. Here are 15 questions you should ask any financial adviser before you hire them.

Looking for a new financial adviser? This tool can match you to an adviser who meets your needs.

These questions can help you determine if a financial adviser is a good match.

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Are all financial advisers fiduciaries?

While many financial advisers operate in a fiduciary capacity, only Registered Investment Advisors (RIAs) are governed by the Investment Advisers Act of 1940 and are legally considered true fiduciaries. This indicates that they are ethically and legally bound to put their client’s interests ahead of their own, meaning they can’t earn a commission for recommending or selling a specific financial product or investment. 

See also: ‘It sounds like a conflict.’ I have an adviser who claims to be a fiduciary, but sells me mutual funds. What gives?

As if it’s not convoluted enough, certified financial planner Derieck Hodges at Anchorpointe Wealth Management says, rather than focusing on the title, ask the financial professional to describe what they do. “Some financial advisers do comprehensive planning while others operate as subject-matter experts,” says Hodges. 

How a financial adviser helps their clients

Because the term financial adviser doesn’t encompass a fixed set of skills, there are numerous ways financial advisers help their clients. 

For one, in addition to managing investments, financial advisers may provide services that include saving for college, navigating long-term healthcare and maximizing tax deductions.

An insurance salesperson can be classified as a financial adviser, even though this person is likely paid a commission and sells a specific product. A registered investment adviser (RIA), on the other hand, will provide advice on securities investments and is a true fiduciary under the law — even though they’re technically lumped into the same financial adviser category as someone selling products and earning commissions. 

Fee-only advisers are often fiduciaries

If you’re looking for help with your investments, pros recommend working with a fee-only fiduciary financial adviser to ensure your best interests are put ahead of their own. To find someone who fits the bill, consider searching the National Association of Personal Financial Advisors (NAPFA) site or the Certified Financial Planner Board (CFP)’s Let’s Make a Plan site.

Looking for a new financial adviser? This tool can match you to an adviser who meets your needs.

What is a financial planner?

Financial planners, whether hired independently or through a bank or wealth management firm,  are often sought out to aid in the creation of long-term financial goals, by creating a plan that covers investing, budgeting, saving and retirement planning.

Because there’s no singular organization that doles out the financial planner title, nor are there legal requirements (and therefore anyone can claim to be one), it’s important for consumers to thoroughly vet potential planners and make sure their credentials are legitimate.

A good starting place to conduct preliminary research is through the Financial Industry Regulatory Authority (FINRA), which offers a free online tool to search brokerage firms as well as the people associated with them.

See also: ‘I want to start setting up my finances for retirement,’ but I’m wondering: Do I need a financial planner or financial counseling to do it right?  

Someone who refers to themselves as a financial planner can also have the designations listed in the below section, which will help indicate how much training, professional experience and more these professionals have.

How a financial planner helps their clients

Financial planners are often utilized by those with complex financial situations as they tend to need a professional perspective on investing and portfolios, insurance protections and major life (and financial) changes like marriage, divorce or inheritance, versus someone with simpler finances who might be able to use a robo-adviser or even DIY the process. A financial planner can assist with financial planning, retirement planning, budget analysis, future projections, investing and the implementation of suggested plans.

Differences between a financial adviser vs. financial planner

The first thing to remind you of is this: “These terms are used interchangeably. Many advisers call themselves financial planners and many planners call themselves financial advisers,” says certified financial planner John Piershale at John Piershale Wealth Management.

Remember, financial advisers are more likely to oversee investment portfolios, whereas financial planners are more often engaged in the long-term planning aspects of one’s finances. Think of advisers as looking at your finances through a more nuanced microscope, where planners focus on the big picture and endgame. While some individuals are only looking for a plan design with the intention of implementing the plan themselves, others are looking for a game plan in addition to someone who can help execute it.

Looking for a new financial adviser? This tool can match you to an adviser who meets your needs.

Professional certifications and designations for financial advisers and planners

The more relevant factor here, than whether someone calls themselves a financial adviser or a financial planner, is what professional designation they have because that’s an indication of their education, training and experience. Here are some:

  • Certified financial planner (CFP): CFPs provide financial advice and are required to adhere to the CFP Board’s code of ethics and conduct, in addition to having completed education requirements, work experience and pass exams. 

  • Chartered financial analyst (CFA): They focus primarily on investment management through wealth management, credit analysis, trading, accounting and financial planning. CFAs are required to have a bachelor’s degree or work equivalent and pass 3 exams that cover topics including accounting, money management, security analysis and other finance subjects. 

  • Chartered Financial Consultant (ChFC): This is a credential offered by the American College of Financial Services (ACFS). To earn this designation, someone must have 3 years of full-time relevant experience, take 8 courses from the ACFS, pass 8 exams and maintain 30 continued education credits every 2 years. 

When to get a financial planner vs. a financial adviser?

Rather than look at whether they call themselves a financial planner or a financial adviser, look at their professional certifications and designations and then vet the professional. Ask them what types of clients they’re used to working with, what their background and experience looks like and what their financial planning and investment philosophies are.

Look for a fiduciary

Regardless of whether you take the planner or adviser route, Piershale says, “Look for an adviser or planner that practices as a full-time fiduciary.” 

The reason it’s so important to work with a fiduciary is because they’re ethically or legally required to adhere to certain standards that put their client’s best interests ahead of their own, meaning they don’t earn a commission for recommending or selling specific products. To find out whether the adviser you’re working with is a fiduciary, ask if they’re fee-only and whether they earn money from anyone other than what their client pays them.

Looking for a new financial adviser? This tool can match you to an adviser who meets your needs.

How to find a financial planner or financial adviser

Depending on the type of help you’re looking for, there are different ways to go about finding the person who best suits your needs. Pros often recommend looking at Certified Financial Planners, the National Association of Personal Financial Advisors (NAPFA), Garrett Planning Network and XY Planning Network
It can also be helpful to ask friends, family and colleagues for referrals for professionals they’ve had a good experience working with. Pros also suggest interviewing 2 to 3 professionals, to get a sense of the different styles, perspectives and relationships available. (Looking for a new financial adviser? This tool can match you to an adviser who meets your needs.)

What is the cost of working with a financial adviser or planner?

The cost of working with a financial adviser can vary greatly depending on the professional’s experience, location, and how they are paid. Advisers typically operate under fee-only, fee-based or commission-based models — though it’s important to note that if you’re working with someone who’s earning commission or is fee-based, they’re likely not a fiduciary.

See also: ‘Should I even bother?’ I pay $3K a year for my financial adviser. Is that worth it? 

Fee-only advisers are often compensated using one of three common fee structures; assets under management (AUM), hourly or project-based. “Assets under management fees typically cost 1% of assets under management,” says certified financial planner Alvin Carlos at District Capital Management.

Meanwhile, “if you’re working with someone who charges a flat rate for a one-time plan, that’s usually between $1,000 and $3,000 depending on the level of complexity in the case,” says Joe Favorito, certified financial planner at Landmark Wealth Management. 

And hourly rates can run anywhere from $150 to $500 per hour, depending on the scope of the work. Of course, this can vary greatly, and know that these fees are negotiable. 

See also: ‘It’s time to negotiate.’ How to get the best financial adviser — for way less money

Unlike fee-only advisers who are strictly paid only by the client, fee-based advisers are paid by the client but also collect commissions from selling financial products, which presents a conflict of interest. 

See also: I don’t want to pay 1% to a financial adviser. But I’m finding it impossible to find a good adviser who charges hourly. What gives?

By knowing they’ll make money on the backend by selling a specific financial product, fee-based advisers are incentivized to recommend investments to their clients, even if they’re not in their client’s best interest. Working with a fiduciary eliminates this conflict of interest by guaranteeing that the adviser’s recommendations put their client’s best interests ahead of their own.

See also:  Am I too broke to afford a financial adviser?

While these are generalized ranges of cost, Favorito says first and foremost, find out how the financial professional is getting paid. “Are they fee-only, or are they fee-based and still collecting other revenue sources? Are they commission based? At that point you can assess not only the cost and how it compares to the industry standards, but also if there are any potential conflicts of interest,” says Favorito. (Looking for a new financial adviser? This tool can match you to an adviser who meets your needs.)


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