What’s the difference between a financial advisor and financial planner?

Derek Bostian, CFP Derek Bostian, CFP

It seems each week the financial industry comes up with a new term, or recycles an old one, of what we should call ourselves.  Financial planner, financial advisor, insurance specialist, financial coach, fiduciary, and the list goes on!  It’s hard to know who is giving you the best advice and has your interests above all others.  Even worse, it seems the industry has worn out the term “fiduciary” over the past few years as new regulations threatened to require everyone to act in your best interest depending on what they were recommending to you.

I’m sure it’s surprising and you may be thinking, “why wouldn’t they always work in my best interest?”  For many, this can make the task of finding an advisor seem like an abyss to finding good, trustworthy help.

Unfortunately, we have to deal with this every day.  The lingo used by many financial professionals can leave you in the dark.  We assume you know what these terms mean but it’s not fair that we do.  I don’t understand what different roles in medicine represent so why should financial services be held to any different standard?  I just trust that the doctor I see will refer me to a specialist if I need one.  Why aren’t we held to the same standard?

Recently I was speaking with a couple and they asked what the difference between a financial advisor and financial planner actually was.  They work with a good friend of mine and his card has “advisor” on it.

These words can mean similar things.  Advisor’s commonly give advice and commonly fall into the sub-category of investment managers.  They may avoid fields like budgeting, spending, and insurance but focus on your long-term investing and savings strategy.  “Advisor” is something you may find used loosely in financial services.  Insurance salespeople, for example, will sometimes label themselves as financial advisors because regulations allow them to do so.  Ultimately, it can be applied to a number of professionals that may or may not sell products or services or work with your best interest in mind.

Financial planners, or Certified Financial Planners are a smaller sub-set of the financial services industry.  They focus on true plans that incorporate different areas of their clients financial lives.  They address everything from budgeting, to insurance, to tax planning and beyond.  The biggest differentiator is the right to call themselves a Certified Financial Planner.  CFP®s are backed by the CFP Board, and are more regulated than non-certified financial “advisors.”The CFP Board is a regulatory body that has a specific set of rules for financial planners to follow, and an entrance exam that all CFP®s have to pass.

What are we and how do we act at Two Waters Wealth Management?

I’m a CERTIFIED FINANCIAL PLANNER™ and an investment advisor representative with Alphastar Capital Management.  I firmly believe in the process, ethics, and education that are required to use this label and see the benefit that it brings to our clients.  Being a CFP® and Investment Advisor requires holds us to the fiduciary standard as well.  More than that though, I believe it’s my obligation to our clients to help them accomplish their goals and act in their best interests no matter what.

We know that understanding the differences between advisor, planner, and the other terms is confusing.  If you have questions our door is always open and we’re happy to help you better understand anything you want to know.

As a result, we built a guide to help you better select a financial professional.

You can also get our guide “7 Steps to Hiring a Financial Advisor.”

Get the guide here

Derek Bostian, CFP
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