A financial planner will help you identify your financial goals and create a plan to achieve them. This could include saving for a home, investing in retirement, saving money for education, planning for your kids’ college, choosing the right insurance products, or all of these.
They will analyze all aspects of your financial situation to help you plan and achieve your goals. These could include strategies to pay off debt, the best asset allocations for retirement accounts, and advice on financial products that you can consider buying to help you achieve your goals.
Financial Planner vs. Financial Advisor
Sometimes, the terms financial advisor and financial planner can be used interchangeably. Both types of professionals offer financial planning services to help clients achieve their financial goals.
However, financial advisors are generally considered to be part of a larger category. These professionals can manage your investments, arrange for insurance coverage, and act as your stockbroker. They also offer financial planning services. Financial planners specialize in providing more specific services.
Financial Planner Types
Important to remember that the term “financial advisor” is an unregulated umbrella term. Anybody can be a financial planner or offer financial planning services. While some may be more skilled in specific areas of planning such as tax management or retirement, others can offer a holistic approach. Some may not be in your best interest and should be avoided.
Fiduciary Financial Planner
A fiduciary advisor must act in the best interests of their client. Fiduciary duty is the obligation of a financial planner to protect their client’s financial interests. Practically, a fiduciary financial advisor must provide the best solutions for their clients at the lowest price, regardless of the fees or commissions they earn–from the client, or from other sources.
A suitability standard is not mandatory for all financial planners. A financial advisor or financial planner must recommend products and services that meet your needs. However, they can also recommend products that are more expensive or make them higher commissions.
The best way to pick a financial advisor is to always choose a fiduciary. This will ensure that you are aware of the best products and services they have recommended for you.
Certified Financial Planner
Certified Financial Planner ( CFP) is an industry credential that meets rigorous educational and ethical requirements. It prepares certified financial planners to offer comprehensive financial planning services.
CFPs are required to act as fiduciaries. Most work on a fee-only model, which means they will only be paid by you and not the products they recommend. CFPs are a mainstay of the financial planning community and where many clients start their financial planning journeys due to their extensive training and fiduciary standards.
An “e” is used to denote investment advisers. These are individuals or companies who assist clients in buying and selling securities and may also provide financial advice. There are two types of investment advisers. They differ primarily by whether they follow suitability or fiduciary standards.
- Registered Representatives: Registered representatives buy and sell securities for their clients. They are licensed by the brokerage firms where they work. You make the decisions and the representative just executes them. Some people advertise themselves as financial planners or advisors. You should be aware that a registered representative is only required to provide financial advice. This could impact the products or services they recommend.
- Investment Advisor Representatives: Investment advisor representatives (IARs) are employed by Registered Investment Advisors ( RIAs), which is a group of companies that offer financial advice and planning services. IARs, unlike registered representatives, are held to fiduciary standards. To enhance their financial planning skills, many may have CFPs or other credentials.
Robo-advisors offer automated investment management. Many will place you in an investment portfolio that is pre-built based on your goals, willingness to take on risk, and which they’ll manage and maintain over time.
Technically, Robo-advisors can be considered RIAs. This means that they are also subject to a fiduciary standard. Many are now adding more financial planning by CFPs or human planners to their automated offerings. This hybrid approach might be suitable for beginners who only occasionally require the services of financial planners.
Wealth managers are financial planners who work with high-net-worth people. Because they are working with wealthy clients, they often specialize in areas of financial planning that affect the wealthy such as estate planning and legal planning.
Wealth manager, like the term financial planner, isn’t regulated, which means that anyone can call themselves a wealth manager, regardless of their credentials. However, not all wealth managers are fiduciaries.
Are You a Financial Planner Required?
Although most people could benefit from the help of a financial advisor, not all may. A financial planner may not be necessary if your finances are simple. This means that you have money saved, are working, and saving money.
A financial planner may be able to help you if your finances become more complicated or if you have a change in your financial situation, such as:
- A significant amount of money is given to you. A financial planner can help you plan how to use the money to reach your goals.
- You have a change in your income. A financial planner can help you adjust your retirement savings and create a budget.
- You’re getting married. To discuss your financial goals, such as how to pay off debts, plan for the future, and save money for a home, or for planning for children, you might consider meeting with a financial advisor.
- You’re getting divorced. Financial advisors can help you with difficult situations like divorce. A financial planner who specializes in divorce can help you determine child support and alimony, divide up personal property, and understand tax laws.
- You have a new child. A financial planner can help you determine the type of insurance you need and how you can save for college.
How To Choose a Financial Planner
You’ll need to know a few things if you are convinced that working with a financial advisor is right for you.
You can be a financial planner. It’s a good idea to search for qualifications that are respected like:
- CFP A CFP can help you plan every aspect of your financial future. A CFP is the best place to start if you need general financial help. They all have to meet strict requirements and act as fiduciaries on behalf of their clients.
- CPA A CPA is a certified public accountant who specializes in tax planning. A CPA is a professional who can help you manage your taxable income and decrease the amount you owe when it comes to tax time.
- CFA A chartered finance analyst ( CFA ) can be a financial planner. However, most prefer to help companies manage their finances rather than individuals. CFAs can offer financial planning services. They have passed rigorous industry exams and have many years of experience.
This post was written by All Seasons Wealth. At All Seasons Wealth, we provide expert advice and emphasize the importance of creating in-house portfolios to personalize your strategy for asset management, financial planning, and cash management. We utilize research and perform market analysis to provide you with retirement planning in Tampa Fl. No matter your needs, we can work with you to develop a consulting solution tailored to you.
Any opinions are those of All Seasons Wealth and not necessarily those of RJFS or Raymond James. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Past performance may not be indicative of future results.