What are the differences between a financial planner and a financial advisor
You’ve decided to introduce financial wellness benefits to your organization. And one of your offerings is giving your employees 1-on-1 access to financial professionals. Congratulations! This is one of the best ways to support the financial well-being of your employees.
But one thing may have you stumped: what’s the difference between a financial planner and a financial advisor? And which financial professional is the best choice for your employees? In this post, we’ll explain the difference and help you decide which one might make the most sense for your workforce.
Wondering the difference between a financial advisor and a financial planner? This infographic can help.
There are a lot of gray areas when it comes to defining the difference between financial advisors and financial planners. One of the reasons it’s so ambiguous is because there are no federal regulations around the titles financial professionals can use.
But in general, people agree that financial advisor is an umbrella term that refers to various financial professionals, such as stockbrokers, insurance agents, and tax preparers. A financial planner is a type of financial advisor. There are other differences that we’ll outline below as well.
While this isn’t always the case, financial advisors are more likely to provide broad, generalized advice to their clients. Or, they may specialize in one area of finances—such as investment management—and only offer guidance in that specific area.
Financial planners, on the other hand, typically take a more holistic approach to finances. While financial planners can certainly specialize in various areas—from investing to estate planning to taxes—they prefer to offer comprehensive guidance that considers all aspects of their client’s financial situation.
Due to the varying scopes of their work, financial planners and financial advisors tend to attract different types of clients.
Since people typically seek out financial advisors when they have a specific question or milestone in mind, the relationship tends to be shorter-lived. It’s also common for financial advisors to specialize in areas like wealth management, so they only work with high-net-worth individuals.
Financial planners help people understand, manage, and track progress on their finances in an ongoing manner. Because of this, financial planners usually focus on establishing longer-term relationships with their clients. Generally, financial planners also work with people of all income levels, backgrounds, and life circumstances.
One key difference between financial advisors and financial planners is that the latter has a formal certification process.
A Certified Financial Planner™ (CFP®) must complete coursework, take exams, and gain real-world experience to receive their designation. Most importantly, all CFP® professionals are bound by the fiduciary standard—which means they have to work in the clients’ best interest.
Some financial advisors abide by the fiduciary standard as well. For instance, advisors who buy and sell stocks must hold a Series 65 securities license. However, this isn’t required for all financial advisors, which risks clients receiving biased or harmful guidance.
OK, now that you understand the difference between a financial planner and a financial advisor, how do you choose the right professional for your employees? Whether you decide to cover the cost of 1-on-1 sessions with a financial professional or offer your workforce access to a network through a platform like Origin, there are 3 things to look for:
At Origin, we chose to create a network of CFP® professionals to provide the most comprehensive financial wellness experience for employees. We believe CFP® professionals are the most capable of providing holistic and comprehensive guidance to your employees. Also, as fiduciaries, our financial professionals are legally obligated to recommend services that best meet your employees’ needs.
We put a lot of time and care into selecting the financial professionals we choose to work with. We have the largest financial planning network globally, and our CFP® professionals are:
Now that you understand the distinction between financial planners and financial advisors, it’s time to take the next step in your financial wellness program! If you want to learn how Origin’s network of CFP® professionals can support your employees, request a demo.
Learn how addressing the financial needs of your employees will give your company a leg up