Planning for retirement is essential at any age.  Some people are excellent with their finances, planning, and understanding of the investment market, but most are not.  The question becomes, should you work with a financial advisor or a financial planner?  Are they the same? While financial advisors and planners guide investments, taxes, and other financial matters, they focus on different aspects of a person’s finances.  It is important to understand each role before deciding which professional will meet your unique financial needs.

What does a Financial Advisor do?

A financial advisor will focus on managing an individual’s investment portfolio.  Financial advisors can help clients with various monetary decisions, including saving for retirement, buying a home, or investing in a business.  In addition, Financial Advisors can arrange insurance coverage such as life, long-term care, or an annuity policy and help strategize for estate planning purposes. Remember, this does not replace working with an estate planning attorney.  Since financial advisors work with investments, most pass specific licensing exams, including the Financial Industry Regulatory Authority, or FINRA, Series 7 Exam, or potentially the Series 65 Exam (required for registered investment advisors).

What does a Financial Planner do?

A Financial Planner looks at the entire financial picture and an individual’s long-term goals. Most financial planners create a budget, develop a savings plan, and discuss investing and retirement planning.  Financial planners look at the bigger picture, so they may have a private practice or work for a bank, wealth management firm, or non-profit organization.  Financial planners may be brokers, investment advisors, insurance agents, practicing accountants, or someone without financial credentials. Some planners specialize in specific areas such as taxes, investments, retirement, or estate planning.  In addition, financial planners may hold a particular license or designation, such as Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), or Certified Investment Management Analyst (CIMA), among others.  Plus, some financial planners may be financial advisors, too.

Should I hire a Financial Advisor or Planner?

There are many financial advisors and planners.  Therefore, do your homework before hiring somebody to help you with your financial goals.  If you do not have the confidence to manage your finances and investments, have a complex financial situation, or are planning for a significant event, such as retirement, then you should hire a financial advisor.  A financial advisor can monitor and recommend the best investments that align with your goals.  In addition, they can recommend or make adjustments to your portfolio based on your specific circumstances.

On the other hand, if you need help analyzing your income, expenses, assets, and liabilities, a financial planner will collaborate with you to establish monetary goals and course of action.  Furthermore, a financial planner can guide investment choices, tax planning, and retirement planning, among others.  No matter what, find a financial planner who aligns with your values, has expertise, and provides sound financial advice.

Is there a fee for this service?

Typically, financial advisors charge an annual fee for their services. Some charge commissions on products they sell, such as mutual funds or annuities. Financial planners also charge a fee, which may be monthly, quarterly, annually, or project-based. Furthermore, financial planners may collect a commission on any products they sell. It is best to speak with the person about their services and fees so that everyone understands the expectations.

Whether you are planning for the future or in your retirement years, consider working with a financial advisor or planner. They can help ensure that your money lasts.

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