A financial planner calculates finances

Financial Advisor vs. Financial Planner: What's the Difference?

With such an array of opportunities in the financial industry, it can be hard to choose one career focus, considering how overlapping so many of them are. This overlap can be exceptionally confusing for some positions, especially for that of financial advisors and financial planners. What makes these two such a special case is that while “financial planner” can be synonymous for “financial advisor,” a financial planner is also its own separate career.

What is a financial advisor?

A financial advisor (or adviser, either is correct) works primarily as a counselor for their clients’ finances. Many companies seek people with degrees in psychology for this position, as it is essential to be able to connect with clients and understand their needs, desires, and ultimate goals. There are many specialties amongst financial advisors; they may sell insurance or stocks, which requires additional licensing to that of simply financial advising. On a day-to-day basis, financial advisors meet with clients to help organize their financial future. They may help with anything from clarifying the monetary engle of emergency circumstances that require a rearrangement of funds, to creating a budget, to organizing retirement or investments. So a stockbroker or insurance agent may also be a financial advisor, and vice versa.

To be a financial advisor, you need at least a bachelor’s degree. While studying finance or business can be very helpful, it isn’t a requirement. From there, depending upon your specialties and specific career path, you will need certain certifications based on those plans.

What is a financial planner?

Financial planners do almost exactly the same thing as financial advisors, and are also exactly what they sound like: they set up financial plans for clients, whether it’s to get a college fund started, plan retirement, or get a client’s finances in order. The client relationship is extremely important in this career as well - they must understand where the client is at and where the client wants to be, then make a plan so the client can achieve their end goal. They may set this plan into motion, and work closely with the client to keep it that way.

Financial planning also requires at least a bachelor’s degree, along with certification for the position. Most experts suggest that a degree in business, finance, math, and even law are most helpful to be a financial planner. Taxes are a large part of planning, so it is imperative to take courses that help you understand this aspect of finance as well.

So what’s the difference?

There is hardly a difference between financial advising and financial planning at all, and as previously stated, the terms may be used synonymously. Research seems to suggest that financial advisers tend to be more involved in selling products to clients (like insurance), while planners are focused more on mapping out the client’s financial future. Both positions require the Certified Financial Planner exam, lending strength to the argument that they are interchangeable terms. Both positions have a wide pay scale; an experienced, well-placed financial planner or analyst may make over $100,000 a year, but some make less than $50,000. Lots of positions are expected to open up in this field, as increasing amount of people begin to seek financial assistance, tempered only by the increasing amount of online tools available for those who are in a position to plan for themselves.

Last Updated: April 19, 2016